Livers v Legal Services Commissioner - [2020] NSWCA 317 - NSWCA 2020 case summary — Zoe

NSWNSWCA

Livers v Legal Services Commissioner

[2020] NSWCA 317

Court of Appeal (NSW)|2020-07-10|Before: Ward CJ, White JA, McCallum JA

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At a glance

Source facts

Court

Court of Appeal (NSW)

Decision date

2020-07-10

Before

Ward CJ, White JA, McCallum JA

Catchwords

[1954] HCA 21 Trustees of the Property of Cummins v Cummins (2006) 227 CLR 278

Source

Original judgment source is linked above.

Catchwords

[1954] HCA 21 Trustees of the Property of Cummins v Cummins (2006) 227 CLR 278

Judgment (20 paragraphs)

[1]

The application for disciplinary findings

The disciplinary proceedings were not commenced until 13 July 2016. In noting that delay, I do not mean to criticise those involved as there were no doubt many steps to be taken in the investigation and determination of the complaint. They included a further round of correspondence with the Legal Services Commissioner seeking comment from WIRO and Mr Livers as to each other's assertions. In one letter dated 9 September 2015, Mr Livers said: "My further reply to Mr Garling's allegation is that, if matters were included in the Wiro application, the application would not have been refused because of the 4th September 2014 amendments which Mr Garling sent to our office by way of the Wiro email service on that day and because of the further review of the interpretation of section 59A(2)."
In its recitation of the various responses given by Mr Livers to the allegations, the Tribunal at [44] said of that letter: "In this letter the respondent replied to comments which had been made to the applicant in correspondence with Mr Garling. This letter is confined to a consideration of the provisions of the workers compensation legislation, and whether they permitted a further claim for hearing aids to be made on behalf of the client. We do not apprehend that there is anything contained in this letter which is relevant to the basic allegations made against the respondent."
The last sentence reveals a misconception as to Mr Livers' position; his belief that certain provisions of the workers compensation legislation permitted a further claim for hearing aids to be made on behalf of the client was his whole case. In any event, my point is to emphasise that, by the time the disciplinary proceedings were commenced, years had passed since the events in question.

[2]

Hearings before the Tribunal

The disciplinary proceedings were first heard in 2017, culminating in a finding that Mr Livers was guilty of professional misconduct: Legal Services Commissioner v Livers [2017] NSWCATOD 117. On the strength of that finding, an order was made that Mr Livers' name be removed from the roll of lawyers: Legal Services Commission v Livers (No 2) [2018] NSWCATOD 152. However, as already noted, an appeal against those decisions was allowed and the proceedings were remitted to the Tribunal to be determined according to law: Livers v Legal Services Commissioner [2018] NSWCA 319. Prior to the hearing of that appeal, the Court had ordered that Mr Livers' name be reinstated on the roll until further order. That order was continued by the Court when the appeal was determined: at [93(3)] (Gleeson JA, Barrett AJA and Simpson AJA agreeing at [94] and [95]).
In order to understand the issues that arose for determination at the remitted hearing, it is necessary to say something about the previous appeal. The central complaint in the appeal was that the Tribunal had denied procedural fairness by determining an allegation adverse to Mr Livers that had not been pleaded by the Commissioner. As already explained, the application to WIRO included two attachments, the altered statement and the altered audiogram. Complaint ground 1.1 alleged that Mr Livers altered the date on the audiogram but there was no allegation that he had altered the date on the client's statement. The absence of any such allegation was reiterated during the hearing when counsel for Mr Livers objected to a question in cross-examination directed to the alteration of the date on the statement. She noted (and the cross-examiner accepted) that the Legal Services Commissioner had accepted during the investigation phase that Mr Livers had not made that alteration.
The Tribunal nonetheless proceeded to find at [122] that Mr Livers had altered the date on the statement, based on the similar appearance of the two documents: "Despite the practitioner's strenuous denials, we infer that he altered the date of the audiogram in the same way to read '1/3/14'. While it is not pleaded as part of the charge laid by Ground 1.2, we infer that he also altered the date of the client statement. By synchronising the two dates, the likelihood that any suspicion might be raised in the minds of WIRO officers over the history of the claim was minimised. Making those date changes also avoided a debate in relation to what was meant by the form's request for a 'recent' audiogram."
Mr Livers appealed on the ground that, in making that finding notwithstanding the fact that it was an allegation that had not been pleaded by the Commissioner, the Tribunal failed to afford procedural fairness to him. It was further submitted that the finding concerning the alteration of the date on the statement influenced the Tribunal's findings in respect of other matters, in particular, the finding that he had altered the date of the audiogram to "synchronise" the dates of the two documents. The Court of Appeal upheld that ground at [79]-[80]: "…The allegations that the practitioner had altered the date of the client statement and that the synchronicity of the dates of the client statement and audiogram was for the purpose of minimising suspicion by WIRO over the history of the claim, and avoiding debate as to whether the audiogram was 'recent', was not put to the practitioner before the Tribunal, nor was the practitioner given an opportunity to respond to the relevant issues raised by these allegations. Further and contrary to the Commissioner's submissions, the practitioner was not on notice that what he said in his affidavit (par 37) concerning the alteration of the date of the client statement by [the client], was in dispute or in issue. Nor was the specific finding by the Tribunal concerning the synchronicity between the two dates on the audiogram and the client statement put to the practitioner in cross-examination for him to respond to."
At the outset of the remitted hearing, the Commissioner filed a statement of agreed facts dated 5 June 2019 which included the agreed fact that the alteration to the date of the statement was made by the client and not in the presence of Mr Livers. The remitted hearing was otherwise conducted on the basis of the evidence adduced at the first hearing with further cross-examination of Mr Livers.
On 27 November 2019, the Tribunal (differently constituted) again found Mr Livers guilty of professional misconduct: Legal Services Commissioner v Livers [2019] NSWCATOD 180 at [151]-[152]. The Tribunal found each of the three subparts of the Commissioner's application to be proved.

[3]

Grounds of appeal and notice of contention

The appellant relies on the following grounds of appeal: "1. The Tribunal erred in finding (Legal Services Commissioner v Livers [2019] NSWCATOD 180 (J) at [114], [125], [126], [142] and [143]) that Sub-Grounds 1.1, 1.2 and 1.3 of the application filed on 13 July 2016 were made out where the evidence did not support, and was contrary to, a finding that the appellant misled or attempted to mislead WorkCover Independent Review Officer (WIRO) to obtain a grant of funding or that he altered the date of the client's audiogram. 2. In finding that Sub-Ground 1.1 of the application was made out, the Tribunal erred in deciding the wrong question (at J [95], [113]), namely that appellant altered the date of the client's audiogram, in isolation from the correct issue for determination which was whether the appellant misled or attempted to mislead WIRO to obtain a grant of funding by altering the date of the audiogram. 3. The Tribunal erred in finding (at J [113]) that the appellant changed the date of the client's audiogram from "2012" to "2014" by drawing a line through the tail of the "2" so that it looked like a "4" without having regard to the agreed fact that his client … had altered the date of the signed statement in precisely the same manner."
In response to the appellant's notice to appeal, the Legal Services Commissioner filed a notice of contention dated 15 April 2020 which contains a single ground: "If, which is denied, the Court holds that Ground 2 of the Notice of Appeal filed on 9 April 2020 is established, then the Tribunal erred in failing to find that the appellant misled and/or attempted to mislead the WorkCover Independent Review Office to obtain a grant of funding by altering the date on an audiogram dated 1 March 2012, to read 1 March 2014."
There was a measure of overlap between the grounds of appeal as developed in argument. To avoid confusion, I will refer to the grounds in the disciplinary application as "complaint grounds" and to Mr Livers' grounds of appeal in this Court as "appeal grounds". All three appeal grounds included submissions directed to the allegation of forgery concerning the audiogram, which is complaint ground 1.1. Appeal grounds 2 and 3 concern only complaint ground 1.1. It is accordingly convenient to consider those appeal grounds first and then to consider appeal ground 1 concerning all three complaint grounds.

[4]

Allegation of forgery of the date on the audiogram

Complaint ground 1.1 alleged "misleading and/or attempting to mislead WIRO to obtain a grant of funding by altering the date on an audiogram dated 1 March 2012, to read 1 March 2014".
It is uncontroversial that the Commissioner bore the onus of proof; that in determining that the allegations had been proved, the Tribunal was required to have regard to their gravity and to the seriousness of the consequences if they were made out and that, as the primary allegation was one of fraud, clear or cogent or strict proof was required: Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449 at 449-450; [1992] HCA 66.
Further, as accepted by the Tribunal, the case concerning the alleged alteration of the date on the audiogram was purely circumstantial. No witness could explain it. Mr Livers gave sworn evidence that he did not alter the audiogram and did not know how it came to be altered. Ms Anthony swore an affidavit in which she also said that she did not know how the audiogram came to be altered and that she did not deliberately alter it herself. She was excused from attending the hearing on medical grounds and accordingly her evidence was not tested. That is not to say her statement should be disbelieved, but the fact is that the possibilities around her account remain untested. There was no evidence about the audiogram in the client's affidavit and he was not called to give evidence.
The Tribunal referred at [96] to the summary of the principles concerning circumstantial evidence in the decision of the High Court in Chamberlain v The Queen (No 2) (1984) 153 CLR 521; [1984] HCA 7 at [16]. Reference may also be made in this context to the principles stated in Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1 at 5: "The difference between the criminal standard of proof in its application to circumstantial evidence and the civil is that in the former the facts must be such as to exclude reasonable hypotheses consistent with innocence, while the latter you need only circumstances raising a more probable inference in favour of what is alleged. In questions of this sort, where direct proof is not available, it is enough if the circumstances appearing in the evidence give rise to a reasonable and definite inference: they must do more than give rise to conflicting inferences of equal degrees of probability so that the choice between them is mere matter of conjecture. But if circumstances are proved in which it is reasonable to find a balance of probabilities in favour of the conclusion sought then, though the conclusion may fall short of certainty, it is not to be regarded as a mere conjecture or surmise." (citations omitted)
As noted by Meagher JA in Sachin Sharma v Insurance Australia Ltd trading as NRMA Insurance [2017] NSWCA 307 at [20], that statement has been repeated and cited with approval on many occasions: see Trustees of the Property of Cummins v Cummins (2006) 227 CLR 278; [2006] HCA 6 at [34] fn 50 (Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ).

[5]

Appeal ground 3 - error in finding Mr Livers altered the date of the audiogram

By appeal ground 3, Mr Livers contends that the Tribunal erred in finding that he had altered the date of the audiogram from "2012" to "2014" by drawing a line through the tail of the "2" so that it looked like a "4" without having regard to the agreed fact that the client had altered the date of his statement in precisely the same manner.
Copies of the two altered documents are set out above. The similarity is obvious.
That it was the client who altered the date of the statement was an agreed fact. In circumstances where the matter had been remitted because the previous Tribunal found that Mr Livers had deliberately synchronised the two dates (that is, altered the date on both the statement and the audiogram) to avoid raising suspicion "in the minds of WIRO officers" (an allegation not made by the Commissioner), an obvious consideration at the remitted hearing was to analyse the possible explanations for the synchronicity.
It may be accepted that the Tribunal set out the statement of agreed facts in its entirety at [10] of the decision. However, in the passage of the decision dealing with the question whether Mr Livers altered the date on the audiogram as alleged in complaint ground 1.1, no reference was made to the fact that it was the client who altered the date of the statement, nor was there any discussion of the similarity between the two alterations. At [98] of the decision, the Tribunal noted that Mr Livers prepared the second statement for the client by personally making handwritten amendments to his earlier statement during a conference on 28 February 2014 and that "this statement was returned to [Mr Livers] on 3 March 2014". But the Tribunal made no reference in that context to the fact that, between those dates, the client altered the date on the statement.
Instead, the Tribunal turned to Ms Anthony's evidence as to her preparation of the WIRO application and then turned to the question of access to the file at [102] as follows: "On the evidence the person who had the overall care and control of [the client's] matter was the respondent. Any of his secretarial staff who performed any work did so on the instructions of the respondent. There is no evidence of any person requiring access to [the client's] file between March 2014 and September 2014 other than the respondent. On the evidence only the respondent was actively concerned with the management and prosecution of [the client's] claim for the cost of hearing aids. There is no evidence that [the client] was given the audiogram, and indeed the evidence is that he took away with him the amended statement only. There is no evidence of any requirement by the respondent or any of his staff to deal with the audiogram document for the purpose of the WIRO application prior to it being removed from the file and being placed on the top of the file, which we conclude on the basis of the evidence was undertaken personally by the respondent. Accordingly, he was the only person with physical access to the audiogram. We accept the evidence of Ms Anthony that she did not alter the audiogram. No one has suggested that she did."
The Tribunal concluded at [104] that the audiogram had been altered sometime between January 2014 and 19 September 2014. At [105], the Tribunal noted that Mr Livers has been unable to produce the original audiogram and that only a photocopy of that document was before the Tribunal. The Tribunal found (and there is no challenge to this finding) that the alteration appeared to have been made by a person making a mark through the tail of the number 2 (rather than by methods suggested by Mr Livers that it may have been a mark caused by an innocent pen stroke or a photocopier machine).
Finally, the Tribunal addressed Mr Livers' explanation. He had given evidence that there was no reason for him to change the date on the audiogram. The Tribunal rejected that evidence, finding at [106] that, by January 2014, Mr Livers "knew" that his client's claim for the cost of hearing aids was time-barred. That finding assumed the existence of an objective and constant truth as to whether the claim had any prospect of success. There was no analysis in that context of Mr Livers' evidence as to the reasons for his belief, formed at some point later in 2014, that there was a respectable legal argument for recovering the cost of hearing aids notwithstanding the provisions of s 59A(1).
The Tribunal also referred to the fact that, at the time he made the claim in September 2014, Mr Livers was "aware of the stance that the insurer would take". Again, that was not the determinant as to the prospect of success of the claim, although I accept that it is relevant to the measure of opprobrium due in respect of his certification of the application form, with all its inaccuracies.
The Tribunal further found at [106] that it would not be in Mr Livers' client's interests "to direct attention to the fact that there had been an earlier unsuccessful claim for the cost of hearing aids initiated in 2012" and referred in that context to the evidence of Ms McManis. That finding overlooked Mr Livers' evidence as to his belief concerning the effect of the regulation introduced in September 2014. The Tribunal's only engagement with Mr Livers' argument that altering the audiogram would not logically have assisted his client's case was the glib observation at [108] that "misconduct is almost always accompanied by illogical or irrational behaviour". The Tribunal concluded at [113] that the audiogram was altered by a person and that it was Mr Livers who made that alteration.
Mr Livers submitted that the Tribunal's conclusion was based on a series of erroneous factual findings. First, it was submitted that there was no basis in the evidence for the Tribunal's conclusion that Mr Livers was the only person who had physical access to the audiogram. Indeed, he submitted that the conclusion that only Mr Livers had physical access to the audiogram was plainly wrong having regard to the evidence concerning the way in which his office operated. The submission should be accepted. The evidence established that Mr Livers had a number of paralegals or legal secretaries working for him during the relevant period and that people other than Mr Livers took steps at various stages that required access to the file. There was no evidence to suggest it was physically secured from persons other than Mr Livers.
Further, while it was an agreed fact that the client took his statement home, the evidence did not positively exclude the possibility that the statement and the audiogram were bundled together at that time. Indeed, it is not unlikely that they did travel together, as it was those two documents in combination that formed the basis for investigation of any entitlement to hearing aids. For example, Mr Livers said they were placed together on top of the file for the purpose of being given to Ms Anthony to prepare the WIRO application.
Mr Livers submitted that the possibility that the client had access to the audiogram (either when he took the statement home or on either of his two visits to Mr Livers' office in March 2014) combined with the similarity between the manner in which the date was altered on the audiogram and on the statement give rise to "the clear inference" that it was the client who altered the date on the audiogram. Whether or not that is the clear inference, it is certainly an available inference. The manner of changing the date by drawing a line through the tail of the number 2 so as to make it look something like the number 4 is curious. It is possible that the client changed only the statement and that someone else imitated that change on the audiogram but it seems an unlikely change for a solicitor to make on what was at least a primary document and, according to the evidence of Ms Anthony, probably an original document.
That is particularly so where, as noted on behalf of Mr Livers, the alteration was immediately apparent on the face of the document. While the date was changed from 2012 to 2014, the age of the client was not changed and his date of birth was recorded on the same line. Leaving aside the curious appearance of the amended date, a simple calculation would reveal the anomaly (in 2014, the client was aged 66, not 64 as stated on the altered audiogram). It is plausible that a client or a secretary would make such an alteration innocently, for consistency. It is a larger step to conclude fraud on the part of the solicitor, who could not have failed to appreciate the inappropriateness of making such a change on a medical record.
The Tribunal did not analyse the significance of the fact that the client had changed the date of the statement and instead dismissed out of hand the possibility that he had also changed the date of the audiogram based on its positive finding that he had "only" taken away his statement. As submitted by Mr Livers, the evidence was in fact silent on that issue; the absence of evidence could not positively establish that the client had not also taken away the audiogram. The fact that this did not previously occur to Mr Livers in his various speculative explanations for the appearance of the audiogram report is equivocal; it only confirms guilt if one starts with a presumption of guilt.
Mr Livers also noted that, while Ms Anthony said she would not have "deliberately" altered the date and did not know how it came to be changed, she had no independent recollection of having seen the audiogram or its date. Acceptance of her evidence did not exclude the possibility that she had unthinkingly altered the date of the document or that it had been altered by someone else.
A circumstantial case in which the evidence is capable of giving rise to competing inferences requires consideration of all of the relevant circumstances as a whole rather than a reductionist approach. In my view, the Tribunal's failure to grapple with the obvious similarity between the two altered dates in circumstances where it was agreed that one was not the work of Mr Livers reflected a departure from that principle. As submitted on behalf of Mr Livers, the result was that the Tribunal erroneously excluded the possibility that the client had changed the audiogram. That error was compounded by the unsupported finding that only Mr Livers had access to the file and the overstatement of the effect of Ms Anthony's (untested) evidence.

[9]

Complaint ground 1.2: reliance on the altered client statement

Complaint ground 1.2 concerned the amendments to the client statement. That ground alleged that Mr Livers misled or attempted to mislead WIRO in order to obtain a grant of funding by "drafting and relying on" the statement dated 1 March 2014 which he knew was false or where he was recklessly careless as to whether or not it was false in a material particular, namely that his client did not make a claim earlier for hearing aids.
It is important to note a temporal elision in the formulation of that ground. The amended statement was drafted in February 2014 but not relied upon until September of that year, when the application to WIRO was made.
In his evidence (summarised above) Mr Livers maintained, in effect, that he had not made an earlier claim for hearing aids. He accepted that a claim had been made for industrial deafness but considered the claim for hearing aids to be in a discrete category. He relied on the fact that, in the "application to resolve a dispute" filed in the Workers Compensation Commission, the box for such a claim was not ticked, nor did he provide the information requested in that form if such a claim was made. Mr Livers also made reference to the nature of the workers compensation jurisdiction, where the possibility of multiple claims for evolving conditions is sometimes accommodated (my words), unlike the once and for all determination of a claim brought in the Supreme Court or the District Court. Mr Livers' amendments to the statement, while plainly inappropriate in the form in which he made them, are to be considered in the context that, if his evidence is to be accepted, he believed it was open in the workers compensation jurisdiction to make a differentiated claim for hearing aids at the time he lodged the application with WIRO in September 2014.
The Tribunal appears to have overlooked the temporal issue, saying at [123]: "We agree with [the Legal Services Commissioner] that the amendment made by [Mr Livers] to paragraph 7 of the client's statement was a precise one and reflected a consciousness on the part of the respondent to seek to hide this earlier hearing aid claims history from WIRO."
It seems unlikely that the statement was amended in February with WIRO in mind, given that the application was not made to WIRO until almost 7 months later and after an amendment to the law. The Tribunal nonetheless relied on that finding to support its conclusion that complaint ground 1.2 was made out either on the basis of a deliberate attempt to mislead (at [125]) or on the basis that Mr Livers was recklessly careless "in the sense that…he did not care whether or not he misled WIRO in the manner in which paragraph 7 [of the client statement] was framed" (at [126]).

[10]

Complaint ground 1.3: reliance on the application form

Complaint ground 1.3 alleged that Mr Livers prepared "and/or" relied on the application to WIRO when it contained "material omissions and/or false assertions". The Legal Services Commissioner specified 14 separate statements made by the application (including the attachments) which the Commissioner contended Mr Livers knew were false or as to which he was recklessly careless whether they were false in a material particular. The Tribunal found at [138] that all but three of those statements were false. However, the Tribunal did not find that Mr Livers deliberately made those statements in order to mislead WIRO. Rather, the Tribunal found that Mr Livers had not checked the form (which had been prepared by Ms Anthony) carefully: at [67], [80]-[83]. That was in effect the concession Mr Livers had made at the outset of the proceedings.
The particulars specified by the Commissioner were as follows: "15.1 [the client] had not made a claim prior to 19 June 2012 relating to the injury the subject of the Application - answer to question 3, page 1 of the Application. 15.2 [the client]'s current employer was North Sydney Tafe - answer to Part A question 3 and Part B question 2 of the Application. 15.3 There was no dispute with the insurer - answer to Part B question 1(c) of the Application. 15.4 No dispute had been notified to the insurer - answer to Part B question 1(d) of the Application. 15.5 Proceedings had not been filed in the Workers Compensation Commission - answer to Part B question 1(e) of the Application. 15.6 This was a preliminary investigation - answer to Part C question 1(a) of the Application. 15.7 [the client] wanted to apply for hearing aids only - answer to Part C, question 1(b) of the Application. 15.8 There had not been any past section 66 / 67 claims or payments - answer to Part C, question 3(a) of the Application. 15.9 No prior claims for industrial deafness had been made - answer to Part C, question 3(g) of the Application. 15.10 A recent audiogram from a qualified audiologist was attached - answer to Part C, question 3(g) of the Application. 15.11 No prior claims for industrial deafness had been made - answer to Part C, question 5(e) of the Application. 15.12 A recent audiogram from a qualified audiologist was attached - answer to Part C, question 5(e) of the Application. 15.13 The audiogram attached to the Application was purportedly dated 1 March 2014. 15.14 [the client] had not made a claim earlier for hearing aids as he was not aware he had industrial deafness until a friend of his introduced him to the Respondent who arranged a hearing test - paragraph 7 of the statement of [the client] dated 1 March 2014 (being one of the attachments)."
As already noted, the Tribunal found that Mr Livers did not check the completed form before he signed it to certify its correctness. However, the Tribunal was satisfied that ground 1.3 was made out, saying at [143]: "We are satisfied that the respondent attempted to mislead WIRO in the manner alleged by having caused his secretary, Ms Anthony to prepare the grant application dated 19 September 2014 which contained omissions which were material and assertions which were false as particularised in Particular 15, and in the alternative by relying on that application containing those material omissions and false assertions, all of which was for the purpose of obtaining a grant of funding for the pursuit of a claim for the cost of hearing aids on behalf of his client."
The basis for that finding was that Mr Livers had either deliberately withheld information concerning the existence of the prior claim from Ms Anthony when he instructed her to complete the application form or been recklessly careless in withholding that information "on the basis that he didn't care whether or not it was disclosed to WIRO": at [142].

[11]

A dissonance of perspectives

Mr Prince, who appeared with Mr Olivier for Mr Livers, submitted that the Tribunal did not grapple with the fact that the Commissioner's case was one of fraud by concealment, that is, that Mr Livers set out deliberately to conceal the existence of an earlier workers compensation claim in order to obtain a benefit from WIRO. Mr Prince submitted that this theory of fraud came from "a dissonance of perspectives", explaining the point as follows: "The bureaucrats at WIRO have a perspective whereby the recency of the audiogram is a key factor, and the existence of a prior claim without any differentiation is a key factor in their decision to make [scil: grant] a funding application. There was never any evidence that Mr Livers appreciated that these things were so important to the people at WIRO. There was evidence from Ms Anthony who fills in the forms that she had no idea the recency of the audiogram or the date on the audiogram was something which had any great significance or moment."
The findings of the Tribunal set out above indicate that the Tribunal did turn its mind to the theory of fraud underpinning the Commissioner's case. In my view, however, there is force in the submission that there was a dissonance in the perspectives and legal assumptions with which the client's position was approached by WIRO and Mr Livers respectively. It appears to have been common ground between them that the medical evidence established that the client had a need for hearing aids. The critical question was whether, under the labyrinthine provisions of the workers compensation legislation and in the events that had occurred, he had an entitlement as at October 2014 to recover that cost from the insurer. The premise of the fraud theory is that, as at October 2014, the fact that an earlier workers compensation claim had been made was necessarily fatal to the success of any claim for hearing aids and that Mr Livers well knew that to be the case. It is necessary to test that premise.

[12]

History of the client's claims - Mr Livers' perspective

Before considering Mr Livers' evidence on that issue, it is informative to consider the history of the claims from his perspective. Of course, none of this information was known to WIRO because Mr Livers did not provide it.
The client came to Mr Livers from another firm, Turner Freeman. That firm had obtained a report from a specialist, Dr Williams, who assessed the client to have 6% hearing loss giving 0% whole person impairment. Mr Livers referred the client to Dr Stylis and obtained the audiogram dated 1 March 2012 and the report from Dr Stylis dated 19 March 2012. Dr Stylis assessed the client to have 21.4% hearing loss giving 11% whole person impairment. Being evidence that the whole person impairment exceeded 10%, Dr Stylis' assessment provided the foundation for a claim for lump sum compensation.
Mr Livers accordingly wrote to the insurer to give notice of a claim. That letter included reference to a claim under s 60 for the cost of hearing aids. A central plank of the fraud case is that, by that letter, Mr Livers had made a "claim" that should have been disclosed in answer to the questions on the application form.
In his evidence before the Tribunal, Mr Livers disputed that the letter made a "claim" for hearing aids, arguing that the letter simply gave notice of a claim and that the claim proper is constituted by the application for determination of a dispute filed in the Workers Compensation Commission. When Mr Livers lodged such an application in the present case (the insurer having denied liability), he did not tick the box or complete the section for s 60 expenses, which would have been the appropriate part of the application form in which to make a claim for the cost of hearing aids. He explained in his evidence before the Tribunal that "probably" the reason they didn't make a claim for hearing aids at that stage was that the previous doctor had "given him 'zero' whole person impairment". He said the results they later received from the independent medical specialist were "so good we were surprised". That was a reference to the assessment obtained on referral by the Workers Compensation Commission in 2013, which also came in at 11% whole person impairment, consistently with Dr Stylis' assessment.
As already noted, the directions made by the Arbitrator who referred the proceedings back to the Workers Compensation Commission for that purpose contemplated that the accredited medical specialist would give an opinion as to the need for hearing aids. However, Mr Livers still believed he had made no formal claim for the cost of hearing aids at that stage. He said the arbitrator "must have picked [the issue of hearing aids] up of his own volition" (Tcpt 15/3/17 at p 34, l 25). While views might differ as to whether that evidence adopted an overly technical interpretation of the term "claim", it was the position Mr Livers maintained throughout his evidence.
The report of the independent medical specialist was dated August 2013. The evidence does not establish why, in light of that favourable report, a claim for hearing aids was not made at that time, before the consent orders were entered in November that year. As already noted, those orders did not address the topic of hearing aids.
The following January, Mr Livers wrote to the insurer's solicitor asking "does your client concede that our client requires hearing aids? Otherwise we shall relist the matter for determination." It was put to Mr Livers in cross-examination at the first hearing that the reason the matter was relisted was because the insurer had rejected a "claim" for hearing aids. He replied (Tcpt 15/3/17 p 35 l 22): "No. That's incorrect. What normally happens is sometimes the insurance companies, even though there is no claim for hearing aids in the application or even if there is no claim made by way of a formal notice of claim, if the - the whole person impairment finding by the workers compensation specialist is reasonably high the insurance company will voluntarily pay for hearing aids without a claim."
The difficulty with the strategy of re-listing the proceedings in February was that Mr Livers had not pursued the claim for hearing aids before the expiry of the client's entitlement to s 60 damages on 31 December 2013. Mr Livers acknowledged in cross-examination before the Tribunal that he "should have got the arbitrator back on before 30 December" and explained that he was "probably too busy" or "didn't know that the 30 December 2013 deadline was coming in". He acknowledged that was an oversight on his part (Tcpt 15/3/17 p 84 l 42 to 85 l11). He said "and that's why I was determined to get the man a hearing aid because - it was common procedure not to put the hearing aid claim in because if you got an assessment of 11% then it followed, you know, like it followed - the cost of the hearing aids followed the cause" (Tcpt 15/3/17 at p 85 l 16).
The letter from the insurer declining the claim on the basis that it was statute-barred was dated 25 February 2014. On 28 February 2014, the client attended for the conference at which he and Mr Livers amended his statement. However, the purpose of preparing the amended statement is not clear. The timing suggests it was intended at that stage to contest the insurer's refusal in the Workers Compensation Commission. However, Mr Livers' recollection was that he sought only to have the statement ready in case the law changed (as stated in his letter dated 11 February 2016 to the Commissioner quoted above).
It is at least clear that, by the time of the directions hearing in early April 2014, Mr Livers had capitulated to the inevitability that the claim for hearing aids would be unsuccessful at that time. At that point, he consented to discontinue the proceedings. Then, after the introduction of the regulation on 3 September 2014, he acted quickly to make the application to WIRO.

[14]

Proper construction of s 59A

The relevance of the previous claim was that it might limit the recovery of compensation for treatment (which would include hearing aids) because of the application of s 59A(1) of the Workers Compensation Act 1987. At the time of Mr Livers' application to WIRO, that section relevantly provided: 59A Limit on payment of compensation (1) Compensation is not payable to an injured worker under this Division in respect of any treatment, service or assistance given or provided more than 12 months after a claim for compensation in respect of the injury was first made, unless weekly payments of compensation are or have been paid or payable to the worker. (2) If weekly payments of compensation are or have been paid or payable to the worker, compensation is not payable under this Division in respect of any treatment, service or assistance given or provided more than 12 months after the worker ceased to be entitled to weekly payments of compensation.
Mr Livers had two arguments about s 59A. First he said there was an argument as to the proper construction of the section, which Mr Livers said was being discussed within the profession at around that time. In his initial letter in response to WIRO's complaint about his handling of the application, he noted that this argument had been rejected in a case in June 2014 but later accepted. The two cases in which it was accepted were decided after he lodged the application to WIRO but before Dr Stylis examined the client for the purpose of preparing his second report. Mr Livers provided copies of those cases to WIRO (in response to its complaint) and again to the Legal Services Commissioner (at the time he was called upon to answer the allegations).
In his statutory declaration provided to the Legal Services Commissioner in response to WIRO's complaint, he explained the argument that favoured recovery of medical expenses beyond the 12 month period after a claim was first made: "My advice was that there was an arguable case that the words "payable to the worker" was a continuing liability until such liability had been paid. As my client had not received any weekly payments then there was an arguable case that he had not received his benefit and so he was still entitled to seek a claim for hearing aids. This argument was later accepted in the cases of C Vella vs Penrith City Council and M Collet vs Flying Solo Properties, copies of both cases enclosed." … "Further the law on hearing aids has been in a state of flux including the interpretation of Section 59A. I bring to your attention to the matter of Vella vs Penrith City Council delivered on the 8th October 2014, copy enclosed, & the matter of M Collet vs Flying Solo Properties, copy enclosed, delivered on the 21st October 2014 which states that in applying section 59A of the Workers Compensation Act "even if the worker has no actual entitlement to receive weekly Compensation during the period, there is no loss of entitlement until a work capacity decision determines otherwise." See page 22, paragraph 121. I submit that our client had arguable case under section 59A to pursue his claim for hearing aids as no work capacity decision had been made in respect of his entitlement to weekly wages. In other words even under the section 59A my client had an arguable case to proceed and seek compensation for hearing aids without relying on the Workers Compensation Amendment (existing claims) 2014 workers compensation amendment which came into force on the 4th September 2014. Unfortunately these cases were overturned on appeal on the 25th February 2015 by Deputy President Roche of the Workers compensation Commission in the matter of Collet vs Flying Solo Properties Ltd."
Mr Livers expanded upon that explanation in his affidavit of 2 November 2016. Having regard to the importance of this issue, it is appropriate to set those paragraphs out in full: "47. First, in relation to s 59A(1) of the WC Act, in my view, the words of that section, in particular, "unless weekly payments of compensation are or have been paid or payable to the worker" conditioned the first made claim, such that there was no first claim if there had been no claim for which weekly payments of compensation are or have been paid to the worker. Thus I believed there was an arguable construction of s 59A(1) of the WC Act that did not otherwise preclude the making of an application to WIRO for hearing aids, and that the claim made by [the client] to the insurer was not a claim of the kind caught by s 59A(1) of the WC Act. I was confident in this construction not just from my own review of that provision, but also having argued, or heard argument in support of that construction, in the WCC, and in discussions with colleagues with and against whom I appeared in the WCC. 48. As to this interpretation of s 59A(1) of the WC Act, I expected that in correspondence with WIRO, I would be able to make this submission and moreover, qualify that whilst he had made a claim, that claim was not successful, and accordingly, did not come within s 59A(1). I expected that I would be able to make these submissions because in my previous experience making applications to WIRO I have engaged in correspondence with WIRO officers clarifying and making submissions in respect of matters contained in the application when called upon by WIRO officers. However in this application WIRO officers made no requisition."
As noted above, Mr Livers frankly conceded that this argument had initially been rejected by the Workers Compensation Commission. The decision in which the argument was rejected was Brassaud v Chubb Fire Safety Ltd [2014] NSWWCC 202 published on 19 June 2014.
The first of the two decisions upholding the argument to which Mr Livers referred was the decision of the Workers Compensation Commission in the matter of Vella v Penrith City Council [2014] NSWWCC 363. That case was argued in August 2014 (before Mr Livers lodged the application with WIRO) and decided on 8 October 2014 (before he instructed Dr Stylis to prepare a further report). In that case, the Commission held that Mr Vella was not precluded by the operation of s 59A in obtaining compensation for proposed surgery. The Commission considered the earlier decision in Brassaud and disagreed with it, holding that s 59A(1) "does not require that the weekly payments of compensation occur in any particular period": at [83]. I am mindful of the fact that the Tribunal did not consider the effect of the decision (as I will explain, that is my point). If I have understood the decision correctly, the argument was that, on a proper construction of s 59A, the 12 month limitation period on claims for medical expenses under s 60 did not begin to run until it was established whether, in the language of s 59A(1), "weekly payments of compensation are or have been paid or payable to the worker": at [81] and [83].
Mr Livers said that he also had had regard to a case note published by Turks Legal about the decision in Vella. Only the first page of that note is in evidence. It acknowledges the decision in Vella and hints at an argument that the decision is "inconsistent with the purposes of the 2012 amendments" (which introduced s 59A). However, the substance of the note is not reproduced in the evidence.
The construction of the section adopted in Vella was approved in Collet v Flying Solo Properties Pty Ltd [2014] NSWWCC 388, a decision published on 21 October 2014. The Commission held that section 59A(1) did not require that weekly payments of compensation were required in any particular period. The Commission said at [121]: "Even if a worker has no actual entitlement to receive weekly compensation during the period, there is no loss of the entitlement until a work capacity decision determines otherwise."
However, as Mr Livers frankly disclosed, the argument was scotched in an appeal in the Collet case: Flying Solo Properties Pty Ltd t/as Artee Signs v Collet [2015] NSWWCCPD 14. The decision in the appeal was published in 25 February 2015, after Mr Livers' correspondence with WIRO concerning the appeal but before WIRO's letter to him accusing him of having made a fraudulent grant application back in September 2014.
In the appeal in Collet, a presidential member of the Commission (Deputy President Roche) undertook a careful analysis of the competing arguments as to the proper construction of s 59A. After setting out a careful summary of the operation of the section based on that analysis, the Deputy President said at [77]: "In a straightforward case, such as the present, the operation of s 59A has posed no real difficulty. However, in the vast majority of cases, where workers' entitlements to weekly compensation are uncertain and disputed, the provision will create great uncertainty, unnecessary litigation, and, potentially, considerable hardship while parties fight about whether compensation was paid or payable and whether, and, if so, when, the worker's entitlement to weekly compensation ceased. It is clearly a provision that is in need of urgent reform."
The Tribunal's decision made only the briefest reference to this issue (at [121]) and, in doing so, assumed the correctness of the position established in the appeal decision in Collet: "We observe that there was never any question raised in any of the documentation which became evidence in these proceedings, or indeed in any other evidentiary material before us that in some way [the client] was entitled to payment of weekly compensation or was so paid. Prima facie, his claim for the cost of hearing aids was always time-barred in the manner asserted by the insurer. Indeed, the respondent did not ultimately contend otherwise, and discontinued the proceedings which he had initiated in 2014 on behalf of his client for the cost of hearing aids."
That reasoning overlooked the previous uncertainty as to the proper construction of s 59A recognised by the Deputy President in the appeal in Collet. More importantly, it overlooked the alternative construction of the section adopted in Vella in October 2014, the existence of which corroborates Mr Livers' evidence concerning discussion in the industry of a live legal question at that time.

[15]

Workers Compensation Amendment (Existing Claims) Regulation 2014

Mr Livers' second argument was based on the Workers Compensation Amendment (Existing Claims) Regulation 2014, which came into force on 3 September 2014. In his statutory declaration, Mr Livers said: "Pursuant to the Wiro Wire dated 4.9.14, copy enclosed, forwarded to our office by Wiro and pursuant to the Workers Compensation Amendment (Existing Claims) regulation 2014, copy enclosed, I advised my client that as he had made an unsuccessful claim for hearing aids prior to the 1.10.12 he could apply to WIRO for funding to obtain an up to date report and make a further claim for hearing aids."
The enclosure was a fact sheet published by WorkCover which stated that the Minister had announced changes to workers' compensation benefits "for workers who made a claim before 1 October 2012" and that the changes provided for continued access until retiring age to a number of items listed in the fact sheet. The listed items included hearing aids. The fact sheet faithfully recorded the effect of the regulation.
In his affidavit, Mr Livers said: "49. Secondly, I also believed I could rely on the amendments referred to above at paragraph 45. That amendment relied on there being a prior claim and operated to exempt the operation of s 59A of the WC Act in respect of existing claims for compensation, in respect of, inter alia, hearing aids."
It was a condition of any such claim that the client had made a claim prior to 1 October 2012. Mr Livers recognised the inconsistency between his two arguments. In his affidavit, he said: "50. Although these alternative bases seemed contradictory, one relying on there not being a claim, and another relying on there being a claim, in respect of which contradiction I did not seek to resolve and did not at the time turn my mind to, and may well be wrong, as a matter of law. I believed at the time that I had reviewed the legislation and had a good arguable basis on which to make a claim for hearing aids to WIRO on behalf of [the client]. 51. It was on this basis that I was therefore ultimately satisfied of the correctness of statements particularised in the particulars 15.1, 15.3, 15.4, 15.5, 15.6, 15.7, 15.8, 15.9, 15.10, 15.11, 15.12 and 15.14 of the Application for Disciplinary Findings and Orders."
As indicated by that evidence, Mr Livers believed that the regulation allowed a claim for hearing aids in circumstances where there had been a prior claim. As noted by White JA during the hearing of the appeal, that belief was inconsistent with any intention to mislead WIRO because, far from affording a reason to conceal any claim, the application would rely upon the existence of a prior claim. There would be no reason to hide the prior claim if reliance were to be placed on the September regulation. Again, there was no attempt in cross-examination to grapple with that issue and the Tribunal did not address it in its decision.
It appears Mr Livers' reliance on the regulation was misconceived. The regulation did address the perceived unfairness of confining claims for medical expenses to a period of 12 months from the commencement of a claim by extending that period in the case of claims made prior to October 2012. However, the extension did not apply to Mr Livers' client because, as at 3 September 2014, he had already reached retirement age. The regulation provided for an extension of the time within which to claim medical expenses under s 60 only up until retirement age.
The evidence does not establish whether or when Mr Livers appreciated the difficulty. He was cross-examined at length and repetitively at the first hearing before the Tribunal but not in terms that descended to the detail of his reasons for his belief that the claim for hearing aids had reasonable prospects of success. Instead, counsel for the Commissioner at that hearing (not counsel who appeared at the remitted hearing or in the appeal) repeatedly put it to him that he "knew" s 59A precluded any claim and he repeatedly denied that proposition.
But for the difficulty that the client had reached retirement age by the time the regulation came into force, it would have had the effect that the client was entitled to make a claim for the cost of hearing aids after 31 December 2013. To make that claim, it would have been necessary to prove the existence of the prior claim.
Mr Livers was not cross-examined about his view as to the prospects of the claim at the first hearing before the Tribunal. The only question came from the presiding member of the Tribunal: "HIS HONOUR: Mr Livers, I'm sorry to interrupt, but would you mind just repeating that first bit for me because I'm not an expert in workers compensation so I just need to be quite clear on what your version is? WITNESS: The s 59A provision, according to some legal practitioners, was clumsily worded and it was considered by some of the arbitrators and some of the workers compensation practitioners that there was a way around the section 60 expenses restrictions because of the wording of 59A. It's quite complicated, but it basically means that if, for any type of a claim, if you - you would still be entitled to section 60 expenses if you haven't exhausted your weekly payments of compensation or you are still liable to be paid workers compensation on a weekly basis, and so therefore you are not caught by the restriction of the section 60 claim for medical expenses and the Vella and the Collet decisions vindicated that interpretation but, unfortunately, in February 2015 the Collet decision was overturned and then the New South Wales government brought in a law to clarify the misunderstanding of 59A."
The cross-examiner did not test that evidence, contenting herself with this exchange: "Q: When the LSC was investigating the complaint against you, you made lengthy submissions about your interpretation of 59A and why, in light of that interpretation, your client's claim for hearing aids had reasonable prospects. Is that correct? A: Yes. Q: And you still adamantly believe your interpretation of 59A gave your client reasonable prospects at the time" A: Yes. Yes."
As already noted, the remitted hearing proceeded on the basis of the evidence given at the first hearing with some further cross-examination of Mr Livers by different counsel. Having regard to the limited reason for the remittal, that was not the occasion to rehearse the matters canvassed at the first hearing. I make no criticism of counsel for the Commissioner at the remitted hearing for not exploring that issue. The fact remains that Mr Livers was never challenged as to the honesty or reasonableness of his belief that, as at the time he lodged the application to WIRO, there were two alternative (albeit arguably inconsistent) grounds for claiming the cost of hearing aids on behalf of the client. As it turns out, one was wrong and the other was later kyboshed, but that is not the point.
It is clear enough that the Tribunal, which had the benefit of seeing Mr Livers in the witness box, was sceptical about his belief at the time he lodged the application to WIRO. The difficulty is that he was never challenged as to his legal reasoning in reaching that belief. Further, the Tribunal did not engage with that reasoning in its decision.

[16]

WIRO's view as to the prospects of success of the claim

The Legal Services Commissioner relied on the evidence of Ms McManis as to WIRO's reason for approving the grant application and what the decision would have been had the true position been disclosed. Ms McManis addressed the principles applied in assessing grant applications only at the broadest level. She said at par 17 (it is not clear whether she was here explaining her approach generally or her approach to the application in the present case): "When assessing and considering the Application, I had regard to the legislation to see if a claim is arguable. My assessment was based on the legislation and case law."
It appears from that evidence that the ultimate criterion for funding a claim was that it was arguable.
In response to Mr Livers' statement in his affidavit that he expected to be able to make further submissions in correspondence with WIRO, Ms McManis made the eminently reasonable point that, at the time she assessed the grant application, she had no occasion to engage in correspondence with Mr Livers because, as the application was presented, it looked like an orthodox first claim. She noted (correctly) that there was nothing in the contents of the application which would have led her to correspond with Mr Livers about his interpretation of s 59A. On the strength of the contents of the application form, she assessed the grant application on the understanding that there had been no prior hearing loss claim.
Again, that was perfectly reasonable. The difficulty is that, at the hearing in the Tribunal, the Legal Services Commissioner did not contest the reasonableness of Mr Livers' belief that the claim did have a prospect of success. Ms McManis' affidavit was sworn in response to Mr Livers' affidavits. She made the same point that the Tribunal made at [121] concerning the unlikelihood of any entitlement to weekly benefits but she did not engage with Mr Livers' point about the state of the authorities on that issue as at the time the application was made to WIRO. It is appropriate to set the relevant passage of her affidavit out in full: "22. At the time that I assessed the Application in September 2014 I did not have regard to section 59A of the Workers Compensation Act 1987 because I was unaware that [the client] had made a prior claim in relation to his injuries. 23. The specific section covering the entitlement of a worker for compensation for hearing loss is section 17 of the Workers Compensation Act 1987. That section provides that the date of injury is either the date upon which the worker ceased to be employed in noisy employment or the date upon which he or she first made a claim. 24. Section 59A of the Workers Compensation Act 1987 limits a worker's entitlement to medical treatment expenses. At the time of September 2014, the limit was the later of 12 months after a claim was first made or 12 months after a worker stopped receiving weekly benefits. 25. The provisions of section 59A rarely impact upon the provision of hearing aids. Injured workers with hearing loss seldom receive weekly benefits. Therefore claims for hearing aids are barred if hearing aids had not been accepted within 12 months of the date the claim was first made. On 3 September 2014 the Workers Compensation Regulation 2010 was proclaimed excepting hearing aids from this provision in relation to "existing claims". On 4 December 2015 section 59A itself was amended excluding hearing aids from this provision. 26. The letter from Allianz to Slattery Thompson dated 7 November 2014 invoking section 59A led me to infer that a claim for hearing loss had in fact been made at least 12 months prior to September 2014. This claim was not disclosed in the Application, despite Slattery Thompson acting for [the client] on the prior claim. Had this information been disclosed in the Application, I would not have approved the Application as I would have realised the hearing aids claim had no prospect of success due to the operation of section 59A."
Ms McManis' assessment of the application is understandable but her perspective of the issue does not of itself establish that the application was made fraudulently. An aspect of the dissonance to which Mr Prince referred is that it is by no means clear that Ms McManis and Mr Livers were working on the same assumption as to the state of the law at the time the application was made.

[17]

Evidence that Mr Livers knew what was material to WIRO

Mr Prince submitted that there was no evidence that could establish any knowledge on the part of Mr Livers as to what WIRO would consider to be material to the assessment of the application. That is not entirely correct. At the very least, he was familiar with the application form. He ought to have understood that the information it sought was relevant to WIRO's assessment of grant applications in some way. As noted in the submissions for the Commissioner, the application form included numerous questions requesting information about previous claims in respect of industrial deafness. Mr Livers must have appreciated the relevance of previous claims. His explanation concerning those matters is based on his view that a differentiated claim could be made for hearing aids and his admitted misconduct in amending the client's statement in a careless way and certifying the application form to WIRO without checking its contents (which he admits was negligent but not dishonest or reckless).
While the Commissioner's case focused on individual answers in the grant application form, it is clear enough from Ms McManis' evidence that WIRO's overarching concern was to make an assessment as to whether the claim in respect of which a grant was sought was arguable. Again, given his extensive experience in the field, Mr Livers must be taken to have known that the claim history would be relevant to that assessment. The critical question is whether he deliberately concealed the history for that reason or whether he negligently failed to turn his mind to its likely importance to WIRO.
The evidence as to the approach WIRO takes to the assessment of grant applications was confined to WIRO's subjective position. There was no evidence of any communication of that approach to practitioners. Ms McManis said that practitioners receive "WIRO Wire" releases informing them of WIRO's policies but no particular policy was identified for the purpose of this case. The only evidence on the question of Mr Livers' awareness of the position WIRO would take if it was informed of the prior claim was his denials.
In his evidence at the first hearing, Mr Livers denied that he believed at the time of submitting the application to WIRO that if they knew his client had made a previous claim they may not have granted funding (Tcpt 15/3/17 at p 39, l 40). In re-examination, he said that this issue arose only about 18 to 20 months into WIRO's foundation (Tcpt 15/3/17 at p 82, l 32). He said he was surprised when he received correspondence from WIRO complaining as to the way in which he had handled the matter (Tcpt 15/3/17 at p 81, l 32): "I was surprised, yes, because workers compensation matters are dealt with not in a - not in a - not like, for example, like a Supreme Court claim or a District court claim. They're a bit - most of the practitioners know each other and there is a bit of an understanding about claims and I know most of the claims managers and most of the solicitors who specialise in this area have been doing it for 20 or 30 years, so they know who you are and we know who they are, so…"
Concerning his construction of s 59A, he gave the following evidence: "Q: And I think I read somewhere in your affidavit, or maybe in the material from the Commissioner, that you formed your view as to the application of s 59A? A: Yes Q: Following discussion or consultation, at least informally, with other practitioners in the area? A: And also with the arbitrators. There was - at that time there was a lot of talk and it's in a letter to Dr Stylis which is annexed to the material that people were lobbying because a lot of people were upset that the - that the rumour from the Department of Finance was that they were going to extend the section 60 claim for hearing aids, but if anything, the amendments actually didn't go that far and then they even stepped in and clarified that 59A(1) after Collet and Vella were successful. Q: Was that part of your element of surprise when you received the reaction that you did from ILARS that you thought it was something being discussed in the professional group and the insurance group? A: Yes, I - yes, I did. Because I thought Mr Garling knows about this. It's not - they send us - they actually send us the cases that - WIRO sends us cases that are the most recent cases to assist us in trying to make these claims. If anything, they actually promoted it. That's why I was surprised at what they did."
Mr Livers said that he thought people who knew him knew that he was "pretty determined to get people good results" and he thought WIRO knew that (tcpt 15/5/17, p 83, l 30).
I accept that Ms McManis' evidence was clear as to the relevance to her of any prior claim. In her affidavit, she gave a careful explanation of the effect of her understanding of s 59A including that it precluded any claim for medical expenses after the expiration of 12 months from the relevant date. At par 26 of her affidavit (set out above) she stated that, had Mr Livers' application disclosed that a claim for hearing loss had been made in the 12 months prior to September 2014, she would not have approved the application as she would have "realised the hearing aids claim had no prospect of success due to the operation of s 59A".
Separately, she stated at par 28 of her affidavit that, if she had known of the audiogram dated 1 March 2012 at the time she considered the application, she would not have recommended approval for an additional opinion as "the 2012 report" indicated that the client was entitled to hearing aids (she appears there also to have had in mind Dr Stylis' report dated 19 March 2012). It may be seen from that evidence that Ms McManis accepted that the client had a well-established medical need for hearing aids (to the extent that she thought obtaining any further medical report was a waste of funds). However, she considered that he would have no legal entitlement if s 59A was to apply as she understood it would.
The more difficult question is whether Mr Livers must have known that would be WIRO's approach, which would point to the conclusion that the case is one of deliberate concealment of the earlier claim. The alternative finding contended for by Mr Livers is that, rather, he formed an honest belief that a differentiated claim for hearing aids only was not precluded by s 59A but negligently failed to disclose in his grant application that this was not an orthodox first claim for hearing aids but rather one that rested on a debatable point of construction (and a narrow definition of the term "claim").

[18]

Evidence of concealment

Mr Prince identified aspects of the evidence which he submitted are fundamentally inconsistent with the case sought to be made by the Legal Services Commissioner of deliberate concealment.
First, he noted that the Tribunal analysed that question through the prism of its finding about the alteration of the audiogram. If that finding is not sound, a different analysis must be undertaken. Plainly, that is an important point. For the reasons I have explained above in respect of appeal ground 3, I consider that the Tribunal overlooked the important agreed fact that the client altered the date on his statement and the similarity between that alteration and the alteration to the audiogram. Based on my analysis of the evidence, I am not persuaded to the required standard that Mr Livers forged a false date on the audiogram.
Secondly, Mr Prince noted that the existence of the previous claim was both known by and openly disclosed to the insurer. Again, I consider that to be an important point. The insurer knew about the earlier claim. The claim sent to the insurer in October included a copy of Dr Stylis' 2012 report. Indeed, there is a suggestion in the evidence that an insurer can be taken to know the complete history of an ongoing claim. The reason the insurer rejected the claim in 2012 was that it had the earlier report obtained by Turner Freeman which gave the client 0% whole person impairment.
Mr Livers said in his statutory declaration that he was aware WIRO was entitled to correspond with the insurer. He had virtually badgered the insurer to pay for hearing aids for this client. If, as it appears, the case presents a choice between a fraudulent grab for a small sum of fees to which Mr Livers knew he was not entitled and an open attempt to run an ambitious legal argument to make good his prior failure to secure the cost of hearing aids for a client who needed them, I am more persuaded by the latter, having regard to the history of the claim.
Thirdly, Mr Prince referred to the evidence concerning the invoice sent by Mr Livers to WIRO after the insurer rejected the claim. As set out above, an invoice was initially sent which referred to the audiogram as if it were dated 1 March 2014. After an enquiry from WIRO, an amended invoice was sent which replaced the reference to the 2014 audiogram with a reference to the 2012 audiogram. The argument was that the voluntary disclosure of the 2012 audiogram prior to receipt of any payment from the ILARS scheme is inconsistent with fraud. I am less persuaded on this point. The sending of the 2012 audiogram may have been a mistake on the part of someone assisting Mr Livers; it was his evidence that he did not intend to claim for that audiogram because the insurer had paid for it back in 2012. However, there is some support for Mr Prince's overarching point here in that the circumstances of the invoicing process as a whole suggest Mr Livers' conduct of his practice was shambolic rather than dishonest. Certainly, the evidence around the invoicing process undermines the proposition that he alone had access to the file.
As submitted on behalf of Mr Livers, there was an air of unreality about the allegation concerning the audiogram and the client statement. The letter from WIRO to Mr Livers dated 3 February 2015 accused him of deliberately representing the audiogram and the client statement to be more recent than they in fact were and deliberately concealing the existence of the earlier claim. The proposition was that Mr Livers knew the client's claim for hearing aids had no prospect of success so that the entire application must have been a fraudulent ruse for the sole purpose of rorting the system to obtain legal fees (and an additional fee for Dr Stylis). As already noted, the difficulty is that the client statement was amended in March 2014, well before both the argument in Vella and the introduction of the regulation. From the haphazard appearance of the altered statement alone, the proposition that it was carefully crafted to weave a deceptive path through the minefield of compensation for hearing aids is not very compelling. Conversely, as I have endeavoured to explain, an objective consideration of the law at the time is consistent with there having been a short window (coinciding with the making of the application to WIRO and the pursuit of a further specialist report to support the claim) during which an application for hearing aids only might honestly have been thought to have a prospect of success.
An aspect of the Commissioner's case was that it was an unethical waste of public funds to seek a further medical report in 2014 when the 2012 report was adequate to establish the need for hearing aids. There is a measure of tension between the assertion that there was no need for a fresh report (because the whole person impairment of 11% reported in the 2012 audiogram report established a need for hearing aids) and the proposition that the motive for the alleged forgery of that report was to conceal the fact that it dated back to 2012 (and so was not "recent"). How Mr Livers was supposed to know that WIRO considered it material to have an audiogram that was more recent than 2012, but at the same time also considered that a 2012 report was recent enough to establish a need for hearing aids was not analysed.
The significant point is that, as submitted by Mr Prince, there was no logical or rational reason for Mr Livers to alter the date on the audiogram or to conceal the existence of an earlier claim. His argument based on the 2014 regulation depended on the existence of an earlier claim. As to his alternative argument concerning the proper construction of s 59A, it still makes no sense for him to have concealed the earlier claim or altered the audiogram in order to deceive WIRO. On either of Mr Livers' arguments, the whole question raised by the differentiated claim for hearing aids only was whether it was precluded by the previous claim. The prospect of keeping the earlier claim a secret from WIRO, when it was the central focus of the dispute with the insurer, was surely slim.

[19]

Conclusion

As noted at the outset, the principles applicable to a case of this kind required the Tribunal to be satisfied, considering all of the relevant circumstances, that the evidence did "more than give rise to conflicting inferences of equal degrees of probability so that the choice between them is mere matter of conjecture": Bradshaw at 5. The submissions put on behalf of Mr Livers have persuaded me that the Tribunal erred in finding dishonesty in the present case. For the same reasons, I would reject the proposition that Mr Livers was recklessly careless.
Mr Livers has conceded that his preparation of the amended client statement and his submission of the application form to WIRO containing the errors it did was negligent and that the conduct involved in those allegations amounted to professional misconduct within the meaning of s 497(1) of the Legal Profession Act 2004 being unsatisfactory professional conduct that involved a "substantial failure" to maintain a reasonable standard of competence and diligence. There can be no doubt that the concession was properly made. It was a serious matter to sign a certification in the terms in which Mr Livers did on the WIRO application form without taking care to ensure that the contents of the statement were accurate and not misleading. However, as I have explained, that was deliberately not the case put by the Legal Services Commissioner. In the circumstances, the challenge to the fraud case (including the reckless carelessness case) having succeeded, the only course this Court can properly take is to set aside the decision of the Tribunal and instead to dismiss the Commissioner's application. The orders I propose are: 1. That the decision of the Civil and Administrative Tribunal made 27 November 2019 be set aside. 2. That the application by the Legal Services Commissioner for disciplinary findings and protective orders against the applicant be dismissed. 3. That the Legal Services Commissioner pay the applicant's costs.

Parties

Applicant/Plaintiff:

Livers

Respondent/Defendant:

Legal Services Commissioner

Legislation Cited (5)

Legal Profession Act 2004(NSW)

Workers Compensation Amendment (Existing Claims) Regulation 2014(NSW)

Civil and Administrative Tribunal Act 2013(NSW)

Supreme Court Act 1970(NSW)

Workers Compensation Act 1987(NSW)

Cases Cited (23)

Solicitors: Moray & Agnew (Appellant) Office of the Legal Services Commissioner (Respondent) File Number(s): 2019/400796 2020/108013 Publication restriction: None Decision under appeal Court or tribunal: New South Wales Civil and Administrative Tribunal Jurisdiction: Occupational Division Citation: [2019] NSWCATOD 180 Date of Decision: 27 November 2019 Before: The Hon F Marks, Principal Member P Moran, Senior Member J Schwager AO, General Member File Number(s): 2016/00378739

HEADNOTE [This headnote is not to be read as part of the judgment] The Legal Services Commissioner sought disciplinary findings and protective orders against a solicitor, Mr Peter Livers. The Commissioner's principal allegation was that Mr Livers had fraudulently altered a document (an audiogram) and relied on a grant application containing incorrect information in order to mislead or attempt to mislead the WorkCover Independent Review Office ("WIRO") to obtain a grant of funding for legal representation for a client. WIRO is the office that administers applications for grants from the Independent Legal Assistance and Review Service, a service established by the New South Wales government to provide funding for lawyers acting for injured workers. The case was put squarely on the basis that the alleged misconduct was dishonest or at least "recklessly careless". Mr Livers denied deliberate fraud or dishonesty but admitted that he had been negligent in preparing the application and that his conduct amounted to professional misconduct within the meaning of s 497(1) of the Legal Profession Act 2004 (NSW). In November 2019, the New South Wales Civil and Administrative Tribunal found Mr Livers guilty of professional misconduct on the basis that he had been dishonest. Mr Livers appealed against that decision. The central issue to be resolved on appeal was whether the evidence supported the conclusions reached by the Tribunal. Held (per McCallum JA; Ward CJ in Eq and White JA agreeing), allowing the appeal: (1) "Reckless carelessness" is a difficult term in a professional misconduct context, as carelessness suggests inadvertence while recklessness requires advertence to a risk and a decision to persevere nevertheless: at [43]-[44]. Here, the Commissioner's allegation of "reckless carelessness" required proof of something more than negligence; it required proof of misleading or intending to mislead "with wilful intent": [45]-[46]. Re Hodgekiss (1959) 62 SR (NSW) 340 at 352-3; Re Mayes and the Legal Practitioners Act [1974] 1 NSWLR 19 at 21; Leon Nikolaidis v Legal Services Commissioner [2007] NSWCA 130 at [160] cited. (2) As the primary allegation was one of fraud, clear or cogent or strict proof was required: at [61]. Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449 at 449-450; [1992] HCA 66 applied. (3) A circumstantial case in which the evidence is capable of giving rise to competing inferences requires consideration of all of the relevant circumstances as a whole rather than a reductionist approach: at [80], [157]. Chamberlain v The Queen (No 2) (1984) 153 CLR 521; [1984] HCA 7 at [16]; Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1 at 5; Sachin Sharma v Insurance Australia Ltd trading as NRMA Insurance [2017] NSWCA 307 at [20]; Trustees of the Property of Cummins v Cummins (2006) 227 CLR 278; [2006] HCA 6 at [34] fn 50 cited. (4) The evidence does not support a finding that Mr Livers dishonestly or recklessly misled or attempted to mislead WIRO to obtain a grant of funding by altering the audiogram or relying on the grant application: at [157]-[158].

Judgment

WARD CJ in Eq: I agree with McCallum JA.
WHITE JA: I agree with McCallum JA.
McCALLUM JA: Peter Livers is a legal practitioner of many years' experience specialising in the field of workers compensation, particularly in claims for industrial deafness, which he describes as his "forte". Mr Livers practises as a sole practitioner under the firm name "Slattery Thompson".
In July 2016, the Legal Services Commissioner brought disciplinary proceedings against Mr Livers alleging that he misled or attempted to mislead the WorkCover Independent Review Office ("WIRO") to obtain a grant of funding for legal representation for a client. The proceedings were governed by the Legal Profession Act 2004 (NSW). The case was put squarely on the basis that the misconduct alleged was dishonest or at least "recklessly careless". In August 2017, the Civil and Administrative Tribunal found Mr Livers guilty of professional misconduct on the basis of dishonesty but that decision was subsequently overturned by this Court. The proceedings were remitted to the Tribunal to be determined according to law. In November 2019, the Tribunal again found Mr Livers guilty of professional misconduct on the basis that he had been dishonest. As is the common practice in disciplinary matters, the Tribunal had proceeded on the basis that it would conduct the hearing in two stages, the first stage being to determine whether the complaint was proved, the second stage to determine what if any protective orders should be made on the strength of the findings at the first stage. Only the first stage of the remitted hearing has been heard. The only order the Tribunal has made is to stand the proceedings over to a date to be fixed for the "Stage 2" hearing. In the meantime, Mr Livers has commenced this appeal from the finding of professional misconduct in the "Stage 1" decision.
Mr Livers initially filed a summons seeking leave to appeal. However, the Registrar subsequently made directions requiring the filing of a notice of appeal as the appeal is one that lies as of right: Civil and Administrative Tribunal Act 2013 (NSW), Sch 5 cl 29(2)(b); Tangsilsat v Council of the Law Society of New South Wales [2019] NSWCA 144 at [13] (White JA, Bell P and Macfarlan JA agreeing at [1] and [10]). The basis for White JA's conclusion on that issue in Tangsilsat is that a decision of the Tribunal published following a Stage 1 hearing is an "ancillary decision" within the meaning of s 4 of the Civil and Administrative Tribunal Act (which carries a right of appeal without any requirement for leave) rather than an "interlocutory decision" (which carries a requirement for leave). Applying that analysis, there is no requirement for leave to appeal in the present case.

The complaint against the solicitor

WIRO is the office that administers applications for grants from the Independent Legal Assistance and Review Service ("ILARS"), a service established by the New South Wales government to provide funding for lawyers acting for injured workers. In his application to become an approved legal services provider to WIRO, Mr Livers was required to acknowledge his acceptance of "the principles behind the reforms to the WorkCover scheme being to provide a just, fair and equitable scheme for injured workers" (annexure A to the affidavit of Tamera McManis date 29 November 2016).
By early 2015, Mr Livers had made hundreds of applications for ILARS grants. In January of that year, WIRO formed the view that one of his applications was fraudulent. It made a formal complaint to the Legal Services Commissioner.
The complaint concerned an application made by Mr Livers on behalf of a client in late 2014 for funding to make a claim for the cost of hearing aids only. Mr Livers had acted for the client since late 2011 and had been successful in obtaining a lump sum payment for industrial deafness but there had been no award for hearing aids. It is not clear why the cost of hearing aids was not included in the resolution of the initial claim. Mr Livers first wrote to the relevant insurer (Allianz) on 22 March 2012 giving notice of a claim for compensation under ss 66 and 67 of the Workers Compensation Act 1987 (NSW) and a claim for "the cost of the manufacture and the fitting of hearing aids under s 60 expenses". The material provided in support of that claim included a short statement signed by the client dated 1 March 2012 together with an audiogram report also dated 1 March 2012 and a detailed written assessment report dated 19 March 2012 from Dr Stylis, an ear nose and throat surgeon. Dr Stylis assessed the client to have 11% whole person impairment which was at least capable of supporting a claim. As I will explain, the client's statement and the audiogram were to become a central plank of the Commissioner's fraud allegation.
The insurer denied liability. Mr Livers then lodged an application to resolve a dispute with the Workers Compensation Commission. However, the application did not include a claim for hearing aids. In the application form, the box for claiming "medical expenses" was not ticked and the section for providing information concerning any claim for medical expenses was left blank. A later part of the application included a claim for industrial deafness with a whole person impairment of 11% but the application made no reference to hearing aids.
On 11 June 2013, an Arbitrator of the Workers Compensation Commission remitted the matter to the Registrar for referral to an Approved Medical Specialist. The Arbitrator directed that, following the issue of the Medical Assessment Certificate, the matter be referred back to him "to determine the question of whether hearing aids are reasonably necessary and as to the question of s 67 entitlements, if any". However, it is not clear whether the Approved Medical Specialist in fact addressed the need for hearing aids. A later report by Dr Stylis indicates otherwise, stating "the question of hearing aids was not asked of the Approved Medical Specialist".