Moursellas v Workcover/Allianz Australia

2. The Deputy President erred in law in reducing the workers (sic) costs and disbursement (sic) to only $55.00, as the worker did not act unreasonably, frivolously or vexatiously in the bringing or in relation to his conduct in the proceedings.

3. The Deputy President erred in law in proceeding on the basis that he had jurisdiction to decide the question as to the worker's costs and disbursements, and, as such, the decision was ultra vires.

4. The Deputy President erred in law in failing to reward costs to the worker for the attendance before him on 2 May 2001, when there was no basis under s 95(3) of the Act to reduce or deny costs to the worker."

3 The circumstances are as follows. On 24 March 1999 the worker sustained an injury to his left leg. On 12 March 2001 his payments were set at $452.53 gross per week effective from 24 March 2001. That was 80 per cent of notional weekly earnings reckoned at $565.66 and determined in accordance with s 39 of the Workers Rehabilitation and Compensation Act 1986 ("the Act"). That was advised the same date by notice which stated (AB 12):-

Since the previous determination of your notional weekly earnings, the Australian Bureau of Statistics has recorded an increase/decrease of 3.00% in the rates of remuneration payable to workers generally or to workers engaged in the kind of employment from which your disability arose. Effective from 24 March 2001, your notional weekly earnings have been adjusted to reflect this change as follows:

4 At the foot of that notice, the review rights were detailed. These stated (AB 12):-

If you disagree with the above decision you may apply or (sic) a review under s 90 of the Act. To apply, a completed Notice of Dispute must be lodged with the Workers Compensation Tribunal within one month from the date that you receive this notice."

5 By Notice of Dispute dated 15 March 2001 the worker disputed the decision adjusting his notional weekly earnings by 3 per cent, stating (AB 16):-

1. The decision is incorrect inasmuch as it increases the workers (sic) notional payments by an incorrect rate.

2. The Australian Bureau of Statistics Wage Cost Index publication for the December quarter, made public on 28 February 2001, identifies the percentage change applicable for South Australian workers as 3.1%."

6 There is no dispute between the parties that the correct rate was and is 3.1 per cent. The agent got the multiplier wrong. By Variation of Disputed Decision dated 21 March 2001 the dispute resolution officer of Allianz Australia, Mr Herbert Mitterer, declared as follows (AB 19):-

"That with effect of 24 March 2001 the worker's adjusted notional weekly earnings are $566.20 gross per week with the 80% rate being $452.96 gross per week."

7 As will be seen from all of this the gross weekly amount changed from $452.53 gross per week to $452.96 gross per week, namely 43 cents. That variation was accompanied by a letter dated 21 March 2001 from Allianz to the South Australian Workers Compensation Tribunal in the following terms (AB 20 - 21):-

"Though the decision which is the subject of the Notice of Dispute the action number noted herein has been varied, the compensating authority disputes costs with respect to the application on the grounds that the worker's application was not reasonably brought and amounts to an abuse of process.

The facts are that the case manager determined a 3% economic adjustment whereas the worker disputed on the grounds that it ought to be 3.1%. In practical terms this provides for an increase to the notional weekly earnings of $0.65 gross per week at the 100% per cent rate and $0.52 gross per week at the 80% rate.

The above is however not determinative as to the reasonability of the conduct, in that the compensating authority concedes that the worker had the right to bring this error to the attention of the compensating authority. However the vehicle used was unreasonable in that the Act provides remedies other than litigation to correct the error identified.

S 53(7a) allows for a redetermination in the circumstances as provided above as long as such redetermination is made within 14 days of the date of the determination. It is noted that the determination is dated as 12 March 2001 with the Notice of Dispute being dated 15 March 2001. Therefore the worker and or his solicitors were aware of the error well within the time the Act allows for a redetermination.

In the context of the above, to have acted reasonably the worker and or his legal representative ought to have brought this error to the attention of the case manager and given her the opportunity to remedy same by redetermination thus avoiding the need for litigation and not as is the case here, resorting to litigation as the preferred option."

8 It appears that when the letter was received by the Tribunal Registry the matter was listed before a Deputy President (13). This was a ground of complaint by the appellant (14). He says it could have been sent to a conciliation officer.

9 There is no transcript of proceedings before the Acting Deputy President but there is little dispute as to what occurred before him (10). In Mr Dolphin's affidavit (Exhibit A1) the deponent states he was unsure as to what was at stake in the directions hearing. There had been no application for directions formally describing the relief or order sought. All that existed was the letter of 21 March 2001.

10 Mr Dolphin argued the principle process was pursuant to s 39 and not a claim for compensation. A re-determination as referred to in s 53(7) was a process confined to the s 53 claims procedure. It could not be utilised to correct the error such as occurred here. He then concluded as follows (Exhibit A1):-

"5. I therefore argued that the option put forward by Allianz Australia Workers Compensation (SA) Ltd in their letter 21 March 2001 was not open to the worker and as such the Notice of Dispute was properly brought."

11 Before us the worker contends that proceeding by way of a formal Notice of Dispute was appropriate. It had resulted in a correction in favour of the worker on reconsideration under s 91. It was not only arguably the correct way to deal with the matter, but the only way to deal with the matter. No criticism could be levelled at the worker or his representative, let alone a criticism taken to the degree of "abuse of process".

12 Mr Dolphin's affidavit also contends no claim for costs had in fact been made and as such the compensating authority had been premature in bringing the matter before a Deputy President. While that was faintly argued before us by Mr Saies, of counsel for the appellant, there is an unreality about debating whether the worker's lawyers had an interest in recovering costs. After all the complaint here is that they only received half the costs. The Acting Deputy President rejected the worker's argument and in dealing with the matter under the terms of s 95(3) found the pre-conditions to exist for the exercise of his discretion (s 88F). He then reduced the award by half.

13 Any appeal against the Acting Deputy President's order is limited to a question or questions of law (s 86(1)). The capacity of an appellate body to interfere with an exercise of the discretion as to costs is very limited: see Southern Resources Ltd and Others v Residues Treatment and Trading Co Ltd and Others (1991) 56 SASR 455 at 480. To invoke our jurisdiction, the appellant would, a fortiori, need to demonstrate an error in law. The appellant's situation is not made simpler by reason of an absence of reasons for decision. Every reasonable presumption favours the decision appealed: Carian v Elton (2000) NSWCA 175 per Handley JA at par 50. And reasonableness does not as such involve a question of law, only a question of fact: Edgley v Federal Capital Press of Australia Pty Ltd [2001] FCA 379; (2001) 108 FCR 1.

14 However it is important to distinguish between that part of the exercise involving the exercise of discretion and that part of the process requiring a finding upon the evidence that a party acted unreasonably, frivolously or vexatiously in bringing or in relation to the conduct of proceedings. The latter is not to do with an exercise of discretion.

15 A finding of fact crucial to the decision in the absence of evidence of the fact involves an error of law: see WorkCover/MMI Workers Compensation (SA) Ltd (Ballestrin Concrete Construction Pty Ltd) v Zanini JD125/1999. That said, as Ballestrin reinforces by its reference to Williams v Bill Williams Pty Ltd (1971) 1 NSWLR 547 at 557 differing conclusions or characterisation upon relevant fact or facts will not constitute a question of law. That is, if different conclusions are reasonably possible on the substratum of fact, and what is reasonable is a question of fact. On the other hand an approach may exhibit a misapprehension of what is meant by "acted unreasonably" in the statutory context in which it appears and may then involve a question of law: Blagojevch v Australian Industrial Relations Commission and Another [2000] FCA 483; (2000) 172 ALR 611 at 617.

16 The letter of 12 March 2001 from Allianz states the compensating authority disputes the costs on the grounds that the application was not reasonably brought and amounted to an abuse of process. That part may be dealt with shortly. To fit the latter category, the circumstances must satisfy the test described by the learned Chief Justice in Money Tree Management Services Pty Ltd v The Deputy Commissioner of Taxation (No 2) [2000] SASC 63 where His Honour Doyle CJ employed the dicta from Deputy Commissioner of Taxation v Levick [1999] FCA 1580; (1999) 168 ALR 383 at 390 to the following effect (at par 16):-

"[W]here the case advanced is so hopeless that it can have no real chance of success there is, in the broad sense an abuse of process and this will be so because it can then readily be inferred that the case was not put forward for the purposes of vindicating any right or making out any defence, but for some other ulterior purpose ..."

17 The approach of this Tribunal and its predecessors to the question of reasonableness demonstrates a significant consistency of approach to the prerequisites stated in s 95(3) and their application. Each case shows that insofar as unreasonableness is claimed the Tribunal has required clear evidence.

18 In WorkCover Corporation/MMI Workers Compensation (SA) Ltd (Mason and Cox Foundries) v Hrelescu JD26/1998 the Tribunal took an unfavourable view of the worker, his alleged disability and his credibility. The Acting Deputy President made observation on the right to review in the following terms, (making reference to s 94(b), though the context applies equally to s 90), (at 4):-

"... it seems to me that the only pre-condition for bringing an Application for Judicial Determination is the party in dispute is dissatisfied. It does not say, `If the party reasonably disputes'. The ability to bring a dispute to Judicial Determination is almost unfettered - probably as a matter of social policy in the Workers Compensation context. That is the best and the appropriate method of construing that section. It is a very difficult case to suggest that a party was `unreasonable' in actually bringing the proceedings."

19 The Acting Deputy President added later (at 5, 6):-

"I do not know that the real test is an obvious lack of success of a particular case. The Courts exist to hear cases. One should be very slow at inhibiting access to the Tribunal by people, even though they are not represented.

I believe that what the Section looks at is: has there been conduct that has caused costs to be incurred that would not otherwise be incurred? That is consistent with part of the approach taken by Lander J in Jorgensen-Hall, S6459. Unpalatable as the behaviour of Mr Hrelescu was, I cannot really see that whatever he did caused the Corporation to incur greater costs."

20 Some account may be made for the fact that Hrelescu was representing himself. However much the same approach was taken in Disotto v WorkCover Corporation/MMI Workers Compensation Ltd (St Basil's Home for the Aged) JD92/1999. The worker failed in her claim for compensation she alleged resulted from an assault occurring in the course of her employment. The Deputy President was critical of the worker classifying her evidence as unreliable, her answers evasive and her descriptions exaggerated. Because of this and the absence of reliable, corroborative evidence of complaints of pain for a period of some six months or thereabouts from the time of the assault the case was rejected. The Deputy President stated (at 4, 5):-

"There are cases where a worker fails on issues of credit where his or her conduct has clearly been unreasonable so as to require the invocation of s 95(3). A case where the Tribunal is of the view that the worker is clearly lying on issues central to the pursuit of the claim is an obvious example. But not all adverse findings as to the credit of a worker necessarily translate to a finding that the witness was telling lies. ...

S 95(3) requires me to apply the notion of reasonableness in determining the decision of the worker to initiate this dispute and to bring it to trial. The fact that the worker ultimately failed to persuade me is not decisive. It is a question as to whether in all the circumstances it was unreasonable for the worker to have taken this case on. In my judgment the worker's conduct cannot be so categorised. ..."

21 The approach of the Tribunal to "unreasonableness" for the purposes of s 95(3) in the context of deliberate misleading on significant evidence going to the resolution of the issues has been clearly stated: see Seeby v WorkCover Corporation/MMI Workers Compensation (SA) Ltd (Korvest Ltd) [2001] SAWCT 63 at par 10. But on the other hand it reinforces the fact that the Tribunal is required to pause long before concluding "unreasonableness" on the basis that the argument was wrong or the case failed.

22 The wording in s 347(1) of the Workplace Relations Act 1986 (Commonwealth) is expressed as follows:-

"... instituted the proceeding vexatiously or without reasonable cause."

However, consideration of authority from that source is instructive. In Kanan v Australian Postal and Telecommunications Union [1992] FCA 539; (1992) 43 IR 257 at 264 - 265 Wilcox J stated:-

"It seems to me that one way of testing whether a proceeding is instituted `without reasonable cause' is to ask whether, upon the facts apparent to the applicant at the time of instituting the proceeding, there was no substantial prospect of success. If success depends upon the resolution in the applicant's favour of one or more arguable points of law, it is inappropriate to stigmatise the proceeding as being `without reasonable cause'. ..."

23 Dealing with the notion of "vexatiously" in Nilsen v Loyal Orange Trust (1997) 76 IR 180 at 181, North J described the test in the following terms:-

"... A proceeding will be instituted vexatiously where the predominant purpose in instituting the proceeding is to harass or embarrass the other party, or to gain a collateral advantage: ..."

24 It is suggested that a "collateral advantage" can be inferred. That is, that by instituting the proceedings the worker would gain costs greater than would be obtained by communicating to the agent the fact that there was demonstrable error. Mr Saies contends there is no basis for this conclusion (31). He contends it would be within the range of reasonable response to send a letter detailing the matter, all his other defences ignored, and that the cost of that letter would equate to the costs involved. Also involved would be attending on the client, obtaining instructions and explaining and making a phone call, which in turn may involve a number of phone calls depending on the circumstances. There is some force in Mr Saies' contention.

25 However Mr Saies' primary argument is that there was really no other choice open to the worker than to file a notice of dispute. Moreover that had to be done within the time limit of one month. His argument was that s 53(7) was not available and where a s 39 variation occurred the structure of the Act only provided for correction through Pt 6A of the Act (26, Outline par 3). This was reinforced by the very notice of rights at the foot of the Notice of Variation given by Mr Mitterer on 21 March 2001. This action could not constitute a basis for a finding of "unreasonableness". Even if that argument was wrong on the authorities that did not make it unreasonable for the purposes of s 95(3). Thus whatever our view was as to the scope of the operation of s 53(7) that was not to the point. The issue was whether to argue, as the worker's representatives did, as to why they took the action was unbelievable or unarguable. Again there is force in that argument.

26 In reply Mr Crawley, of counsel for the respondent, pointed to the insignificance of the differential (36). With respect if the differential was there then the worker was entitled to the correct amount. Mr Crawley also argued for an expanse of view of s 53(7) and that it is not limited to the determination of the initial claim. The words "a decision on a claim for compensation" should include procedures under s 38 and s 39. Any other approach could lead to absurd and unmanageable result (37, 38). There is much to be said for this construction. But it is not the point of our examination. The issue is whether taking such a view fell outside the permissible range of arguable interpretations such as to classify it as unreasonable. That approach leads to the result that the appellant's argument must succeed.

27 The appellant also argued, as indicated by the Grounds of Appeal, that the circumstances and procedures never reached a stage invoking the jurisdiction conferred on the Acting Deputy President. The essence of this argument was that an Application for Directions utilising r 10 of the Workers Compensation Tribunal Rules was the necessary trigger to the operation of that operation. It was submitted that even acknowledging informality in the procedures of the Workers Compensation Tribunal, Mr Mitterer's letter of 21 March 2001 could not constitute an Application for Directions.

28 No protest was made by the worker's representatives in the proceedings before the Acting Deputy President (17). The issue of costs to be pursued by the worker then became a matter of dispute. S 95(1) gave the worker a prima facie entitlement to his reasonable costs of the initial reconsideration of the disputed decision which led to the order under s 91. The terms of s 95(3) vest the Tribunal, and only the Tribunal, with the task of dealing with contentions that a party acted "unreasonably, frivolously or vexatiously in bringing or in relation to the conduct of proceedings". As such there is a clear mandate provided in the statute for what the Acting Deputy President did here in hearing and determining the matter. The argument as to jurisdiction is rejected.

29 However the appellant succeeds on the substantive grounds. There being insufficient evidence to reach the opinions required in the proviso in s 95(3) then the prima facie entitlement operates and the worker is to have the costs.

30 That deals with the issue we must decide. However nothing we have said should be understood to comfort those seeking to engage in sharp behaviour or the encouragement of anything other than professional courtesy and sensible engagement between practitioners. We would expect that unless the legislative context requires otherwise, or the matter is unclear, that practitioners will engage the informality and directness of exchange which has been crucial to the resolution of the vast majority of disputations which constitutes a key justification for the existence of the legal profession. If it were demonstrated that improper purposes or motives had been operative the Tribunal would have little hesitation in exercising its jurisdiction appropriately and as no doubt expected by the legislature. This decision is merely authority for the condition precedent not having been approved.