APPEALED FROM: Orr v State of Tasmania [2010] TASWRCT 4

Workers Compensation - Proceedings to obtain compensation - Determination of claims - Costs - Taxation - Counsel's fees - Solicitor/counsel.

Workers Rehabilitation and Compensation Regulations 2001 (Tas), reg13(2).

Judgment Number: [2010] TASSC 28

STUART ORR, ROBIN ORR and ALEXANDER ORR v STATE OF TASMANIA

1 This is an appeal from the Workers Rehabilitation and Compensation Tribunal. It concerns the interpretation of a regulation governing the assessment of party and party costs.

2 The proceedings before the Tribunal concerned a fatal workplace accident. The relatives of the deceased worker applied for lump sum compensation pursuant to the Workers Rehabilitation and Compensation Act 1988 ("the Act"), s67(4). They were successful. The Tribunal subsequently made an order by consent of the parties requiring the State of Tasmania to pay the costs of and incidental to their reference "at the rate of 85% of fees set out in Part 1 of Schedule 1 to the Supreme Court Rules 2000." Their costs were assessed by the Registrar of the Tribunal. The employer applied to the Tribunal for a review of that assessment. Upon that review, a commissioner reduced the assessment from $4,960.90 to $3,739.95. The worker's relatives have appealed.

3 The appellants contend that the learned commissioner made two errors:

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The same legal practitioner acted both as their solicitor and their counsel. In his bill of costs, his fees for the work that he did as counsel were shown as disbursements and calculated at the rate of $300 per hour. However the learned commissioner concluded that the appropriate hourly rate was $170, being 85 per cent of the maximum hourly rate for solicitors' work set out in Pt1 of Sch1 to the Supreme Court Rules 2000. The appellants contend that that conclusion was wrong, and that he should have allowed whatever hourly rate he considered reasonable for counsel.

•

The learned commissioner concluded that the costs of the assessment of costs were not recoverable because the costs he had disallowed were greater than one sixth of the costs he had allowed. The appellants contend that the costs of the assessment of costs should have been allowed.

4 Subject to an exception of no present relevance, the Act, s59(1), empowers the Tribunal to "make such order as to costs as it considers appropriate in any proceedings before it." The Act does not contain a definition of "costs". The meaning of the word must depend on its context. It seems quite clear that s59(1) was intended to empower the Tribunal to make orders in relation to solicitors' costs, counsel's fees, the fees of expert witnesses, other witnesses' expenses, and other out-of-pocket expenses.

5 The Workers Rehabilitation and Compensation Regulations 2001 ("the regulations"), reg13, provides as follows:

"(1) If costs are not agreed between the parties, the successful party to whom costs have been awarded by an order of the Tribunal may serve a bill of costs on any other unsuccessful party.

(2) Unless the Tribunal otherwise orders, the fees in a bill of costs are to be at the rate of 85% of the fees set out in Part 1 of Schedule 1 to the Supreme Court Rules 2000."

6 The critical question in this appeal is whether "the fees" referred to in reg13(2) include the charges of the appellants' legal practitioner for his work as counsel. The appellants contend that "the fees" refers only to solicitors' fees for solicitors' work. The respondent contends that all the professional charges of the appellants' legal practitioner fall within the description "the fees", even if counsel's fees in other situations might not.

7 There is a long established practice in taxations of costs in this Court for counsel's fees to be treated as disbursements, even when the same legal practitioner acts as solicitor and counsel, or when a salaried legal practitioner acts as counsel, or when any legal practitioner who practises both as a barrister and as a solicitor acts as counsel. As far as I am aware, the only reported case in which such a practice is acknowledged is Bickford v Bickford [1923] SASR 148. That case concerned rules of court that drew a distinction between "fees" and "payments". The rules had been amended to increase "fees" by one third. At 157 - 158, Poole J said:

"Fees to counsel in a solicitor's bill when the counsel retained is a practitioner other than the solicitor himself or his partner, are a payment, and payments are excluded from the increase given by r 84, and I think it must also be regarded as 'a payment' when the counsel is the solicitor himself or his partner."

8 Under the Supreme Court Rules, r847(a), a bill of costs for taxation is required to set out "disbursements" and "professional charges" in separate columns. When independent counsel has charged a solicitor a fee for his or her work, it is logical for that fee to be shown as a disbursement. Under r863(11), when a practitioner appears as counsel "the taxing officer is to allow to the practitioner any counsel's fee as may be proper even though the practitioner may also be acting as solicitor in the proceeding, but if the practitioner has acted both as a solicitor and as counsel then the taxing officer in fixing the fee is to have regard to that fact." Under r863(12) "If counsel is remunerated for an appearance only by salary, the taxing officer may allow the same counsel's fee as allowable to independent counsel." As a matter of practice, counsel's fees claimed on taxation under those provisions are treated as disbursements, even though such fees are not in fact paid or payable by a party's solicitor because the counsel involved was that solicitor, his or her partner, or his or her employee.

9 Tasmania, like most Australian jurisdictions, has a fused legal profession, whose members are entitled to practise both as barristers and solicitors, and are not required to practise exclusively as either barristers or solicitors. In such jurisdictions, it is well recognised that, when a practitioner who practises as both a barrister and a solicitor undertakes the work of a barrister, he or she may charge a counsel's fee, whoever the instructing solicitor may be: Watkins v Alcock [1954] Tas SR 63 at 66; Hursey v Williams (unreported, 27/1960, Burbury CJ); Walker v Law Society of Tasmania [1991] Tas R 121 at 138; Commonwealth of Australia v Magripilis (1962) 3 FLR 47; Gbt Corporation Pty Ltd v Scott Sheils and Glover [1994] ACTSC 70 at pars[42] - [47]; Law Society of the Australian Capital Territory v Lardner [1998] ACTSC 24 at pars[35] - [68].

10 Counsel for the appellants made a submission to the effect that reg13(2) does not apply to counsel's fees because it only applies to "the fees set out in Part 1 of Schedule 1 to the Supreme Court Rules", and those fees do not include counsel's fees. In order to understand the scope of Pt1, it is necessary to consider a number of provisions in the Supreme Court Rules.

"(1) The fees that a practitioner is entitled to charge are prescribed by Schedule 1.

...

(8) If any costs, charges or expenses are incurred that are not within Schedule 1, the taxing officer is to allow in respect of those costs, charges or expenses -

(a) the fees prescribed by that Schedule for similar items; or

(b) fees otherwise reasonable in the circumstances."

12 The restriction imposed by r837(1) has been ameliorated by the Legal Profession Act 2007, s303(a), which enables legal practitioners to recover costs under a costs agreement. Costs agreements can provide for remuneration at higher rates than the scale in Sch1.

13 Part 1 of Sch1 is headed "Scale of fees to be allowed to practitioners and counsel". That heading is inaccurate, since Pt1 contains nothing in respect of counsel's fees. Part 2 includes provisions as to counsel's fees in cases involving amounts not exceeding $50,000. Rule 837(4) provides, and provided at all material times, that in certain circumstances "a practitioner or barrister is only entitled to charge the fees provided for in Part 2 of Schedule 1". Rule 863(1) provides as follows:

"Except in a case to which Part 2 of Schedule 1 applies, fees may be allowed to counsel as are reasonable in the circumstances."

14 Item 18 in Pt1, which appears immediately under the heading "Attendances", relates to attendances by practitioners. It is the only provision in Pt1 that fixes an hourly rate of remuneration. At the relevant time, it read as follows:

(i) for each hour, a fee may be allowed as the taxing officer thinks fit, having regard to the degree of difficulty of the case, the experience and any particular expertise of the practitioner and all the circumstances of the case

15 It is quite clear that, in relation to proceedings in this Court, Pt1 of Sch1 applies only to charges for solicitors' work, and does not apply to counsel's fees. The question that arises in this case is whether reg13(2) makes it applicable to counsel's fees for work done in the Tribunal's jurisdiction, at least when the same practitioner acts as solicitor/counsel.

16 The learned commissioner took the view that counsel's fees in this case were not "proper disbursements" because the solicitor/counsel's firm did not have any liability to pay him the amount of those fees, and he did not have the right of recovery against the firm because he could not sue himself. He reasoned that the practitioner's charges for his work as counsel therefore had to be assessed by reference to Pt1 of Sch1, and that the only applicable item in Pt1 was item 18(a)(i). Counsel for the respondent contends that this reasoning was correct.

17 When the Tribunal makes an order for costs, and any items in the bill of costs are disputed, reg15(2) requires the Registrar to undertake an assessment of costs, and empowers the Registrar to "allow or disallow costs including costs in respect of the assessment". Apart from reg13(2), there is nothing in the regulations that fetters the Registrar's discretion in any way. Regulation 16 permits a party to apply for a review of the Registrar's assessment, and requires the Tribunal to undertake that review. Once again, there is nothing in the regulations, apart from reg13(2), that fetters the Tribunal's discretion in exercising its power of review. The functions of the Registrar and the Tribunal in relation to costs assessments and reviews are quasi-judicial. No doubt such an assessment or review, like a taxation of the costs of judicial proceedings, involves "the determination of the amount, fair and reasonable in the circumstances, to which the successful party is entitled, bearing in mind the scale of costs applicable": Tarry v Pryce (No 2) (1987) 88 FLR 270 at 271 per Kearney J (Supreme Court of the Northern Territory).

18 It could not possibly have been intended that reg13(2) should apply to disbursements such as expert witness fees. It was plainly not intended to limit the recovery of expert witness fees from an unsuccessful party by reference to the scale of costs applicable to solicitors' work in this Court. Regulation 13(2) is obviously intended to apply to some "costs" and not others. However the regulations are silent as to whether it applies to all lawyers' fees including all counsels' fees, or whether it applies to counsel's fees only when counsel are working in the same legal practice as the party's solicitor, or whether it does not apply to counsel's fees under any circumstances.

19 No doubt many of the hearings before the Tribunal warrant the attendance of counsel. No doubt much of the work of counsel in matters before the Tribunal warrants the charging of counsel's fees well in excess of the scale applicable to solicitors' work in this Court. If reg13(2) were applicable to counsel's fees, whether in some circumstances or all circumstances, it would prevent a successful party with an order for costs from recovering a reasonable sum in respect of counsel's fees, and would limit the sum recoverable to 85 per cent of the maximum hourly rate for solicitors' work in this Court, unless the Tribunal was persuaded to make an order pursuant to the power conferred by the opening words of the sub-regulation ("Unless the Tribunal otherwise orders"). The Tribunal might well take the view that the sub-regulation was intended to confine the sums recoverable by way of counsel's fees to 85 per cent of the solicitors' scale in the general run of cases.

20 The sub-regulation that I have to construe is contained in some regulations that constitute workers compensation legislation. As a general rule workers compensation legislation, as beneficial legislation, should be given an interpretation that is favourable to workers: McDermott v Owners of SS Tintoretto [1911] AC 35 at 46; Wilson v Wilson's Tiles Works Pty Ltd (1960) 104 CLR 328 at 335; Bird v Commonwealth [1988] HCA 23; (1988) 165 CLR 1 at 9; Odlin Shop Fitting International Pty Ltd v Kaljanac (1993) 29 NSWLR 632 at 639 - 640; Dodd v Executive Air Services Ltd [1975] VicRp 66; [1975] VR 668 at 679, 682; Loizos v Carlton & United Breweries Ltd [1994] NTSC 24; (1994) 94 NTR 31 at 33. There is no reason to depart from that principle in this case.

21 If reg13(2) is interpreted as applying only to fees for solicitors' work, and not to any counsel's fees, then it will provide no obstacle to the Tribunal doing justice in relation to costs in cases in which injured workers or their dependents have been successful. If the sub-regulation were interpreted so that it applied to all or some counsel's fees, it could operate to the disadvantage of such individuals. I think it must follow that reg13(2) should be interpreted as applying only to fees for solicitors' work, and not to any counsel's fees, ie neither to the fees of independent counsel nor to the fees of a practitioner who acts as solicitor/counsel. It is true that this interpretation may disadvantage workers who have been unsuccessful in tribunal proceedings and have been ordered to pay other parties' costs. However, since workers compensation legislation is intended primarily to benefit injured workers and their dependents, the effect of an interpretation of the regulation on those who have pursued successful claims must have more significance than the effect on those who have sought compensation to which they were not entitled, or who have been unsuccessful in tribunal proceedings for some other reason.

22 An interpretation whereby reg13(2) applies only to fees for solicitors' work is also consistent with the fact that the scale of costs made applicable by reg13(2) was originally intended to apply only to solicitors' work.

"(5) If the disallowed costs represent one-sixth or more of the allowed costs specified in the certificate of assessment -

(a) the successful party is not entitled to any costs in respect of the assessment; and

(b) costs in respect of the assessment may be awarded to an unsuccessful party."

24 There are significant differences between this provision and the corresponding provision in the Supreme Court Rules, r865. Rule 865 applies only to professional charges, as distinct from disbursements. However reg15(5) refers to "costs", and that word is consistently used in the Act and the regulations to cover all professional fees and disbursements. Rule 865 applies when the claimed professional charges are reduced by a sixth or more. However reg15(5) requires a comparison between the allowed costs and the disallowed costs. If the claimed costs are reduced by more than one seventh, then the disallowed costs will represent more than one sixth of the allowed costs.

25 In this case, the learned commissioner compared the costs that he had disallowed with the costs that he had allowed. He made no error of principle as to that.

26 Because of the error of the learned commissioner in treating reg13(2) as applicable to counsel's fees, this appeal must succeed. I allow the appeal, set aside the order of the Tribunal, and remit the matter to the Tribunal for the review of the Registrar's assessment of costs to be determined according to law. There is no reason why the Tribunal should not be constituted by the same commissioner.