Barber and Military Rehabilitation and Compensation Commission

[2007] AATA 1044

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2007] AATA 1044

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No N200600850

GENERAL ADMINISTRATIVE  DIVISION		)
Re		CRAIG BARBER

Applicant

And MILITARY REHABILITATION AND COMPENSATION COMMISSION

Respondent

DECISION

Tribunal Senior Member, Mrs Josephine Kelly and Member, Dr John Campbell

Date6 February 2007

PlaceSydney

Decision

The Tribunal makes the following decision in the terms agreed by the parties pursuant to our direction dated 19 December 2006:

1.      The reviewable decision dated 12 October 2005:

1.1     Varied a determination dated 17 May 2005 by changing the description of the Applicant's injury to 'soft tissue injuries to the lumbar spine' and/or 'aggravation of degenerative changes in the lumbar spine' over a period from 26 March 1985 until discharge on 1 July 2000.

1.2     Varied the determination dated 17 May 2005 by accepting that the Applicant no longer suffered from the effects of any 'soft tissue injuries to the lumbar spine' and/or 'aggravation of degenerative changes in the lumbar spine' resulting from incidents which occurred between 26 March 1985 and discharge on 1 July 2000.

1.3     Varied the determination dated 17 May 2005 by changing the description of injury to 'aggravation of degenerative changes in the lumbar spine, including disc bulges at L4/5 and L5/S1'.

1.4     Varied the determination dated 17 May 2005 by accepting that the Applicant no longer suffered from the effects of aggravation of degenerative changes in the lumbar spine, including disc bulges at L4/5 and L5/S1.

1.5     Affirmed the determination dated 17 May 2005 which held that the Applicant had no entitlement to additional lump sum compensation for permanent impairment in respect of his lower back condition.

2.  The reviewable decision is set aside and substituted for it is the decision that:

2.1     That part of the reviewable decision which determined that the Applicant no longer suffered from the effects of any 'soft tissue injuries to the lumbar spine' and/or 'aggravation of degenerative changes in the lumbar spine' resulting from incidents which occurred between 26 March 1985 and discharge on 1 July 2000 is revoked.

2.2     That part of the reviewable decision which determined that the Applicant no longer suffered from the effects of 'aggravation of degenerative changes in the lumbar spine, including disc bulges at L4/5 and L5/S1'  is revoked.

2.3     The Applicant continues to suffer from the effects of 'soft tissue injuries to the lumbar spine and/or aggravation of degenerative changes in the lumbar spine'.

2.4     That part of the reviewable decision which determined that the Applicant had no entitlement to additional lump sum compensation for permanent impairment in respect of the accepted back condition is affirmed.

3.   The Tribunal orders the Commission to pay Mr Barber’s costs of the proceedings up to and including 3 August 2006, as agreed or taxed.

[sgd] Presiding Member
  Senior Member, Mrs Josephine Kelly  

CATCHWORDS

WORKER’S COMPENSATION – Costs argument – Applicant partly successful in substantive hearing – Offer of settlement not accepted – Applicant awarded costs to date of offer of settlement as agreed or taxed.

CASES

Leichhardt Municipal Council v Green [2004] NSWCA 341

Perry v Comcare (2006) 90 ALD 526

LEGISLATION

Sections 24, 25, 27, 62, 67 Safety, Rehabilitation and Compensation Act 1988

Section 3 Administrative Appeals Tribunal Act 1975

REASONS FOR DECISION

Senior Member, Mrs Josephine Kelly and Member, Dr John Campbell                

1.        On 19 December 2006, the Tribunal published findings of fact and directed the parties to prepare agreed terms of the decision, or failing agreement, further argument would be heard. Costs were reserved.  Reasons for the findings were given orally on the same day.  On 30 January 2007 argument was heard by the Tribunal.  An unsigned document “Request for Decision” was before the Tribunal.  It set out terms of a decision including a costs order.   The only matter said to be in dispute was the appropriate costs order. 

2.Accordingly, the Tribunal makes the following decision in the terms agreed by the parties pursuant to our direction:

3.      The reviewable decision dated 12 October 2005:

3.1Varied a determination dated 17 May 2005 by changing the description of the Applicant's injury to 'soft tissue injuries to the lumbar spine' and/or 'aggravation of degenerative changes in the lumbar spine' over a period from 26 March 1985 until discharge on 1 July 2000.

3.2Varied the determination dated 17 May 2005 by accepting that the Applicant no longer suffered from the effects of any 'soft tissue injuries to the lumbar spine' and/or 'aggravation of degenerative changes in the lumbar spine' resulting from incidents which occurred between 26 March 1985 and discharge on 1 July 2000.

3.3Varied the determination dated 17 May 2005 by changing the description of injury to 'aggravation of degenerative changes in the lumbar spine, including disc bulges at L4/5 and L5/S1'.

3.4Varied the determination dated 17 May 2005 by accepting that the Applicant no longer suffered from the effects of aggravation of degenerative changes in the lumbar spine, including disc bulges at L4/5 and L5/S1.

3.5Affirmed the determination dated 17 May 2005 which held that the Applicant had no entitlement to additional lump sum compensation for permanent impairment in respect of his lower back condition.

4.      In substitution therefore the Tribunal decides:

4.1That part of the reviewable decision which determined that the Applicant no longer suffered from the effects of any 'soft tissue injuries to the lumbar spine' and/or 'aggravation of degenerative changes in the lumbar spine' resulting from incidents which occurred between 26 March 1985 and discharge on 1 July 2000 is revoked.

4.2That part of the reviewable decision which determined that the Applicant no longer suffered from the effects of 'aggravation of degenerative changes in the lumbar spine, including disc bulges at L4/5 and L5/S1' is revoked.

4.3The Applicant continues to suffer from the effects of 'soft tissue injuries to the lumbar spine and/or aggravation of degenerative changes in the lumbar spine' (the accepted back condition)

4.4That part of the reviewable decision which determined that the Applicant had no entitlement to additional lump sum compensation for permanent impairment in respect of the accepted back condition is affirmed.

Costs

5.Mr Richards who appeared for Mr Barber, said that he accepted that there could be no order for costs in his client’s favour in respect of the issue of additional lump sum compensation for permanent impairment because he was unsuccessful on that question.  However he argued that there should be an order for costs in his client’s favour in relation to the question of ongoing liability up to and including, as we understand it, the date of hearing.  We will return to his concession that no order can be made in relation to the additional lump sum compensation.

6.The factual background upon which the argument was based was: 

(a)On 5 April 2006 the solicitors for the Respondent, Military Rehabilitation and Compensation Commission (“the Commission”) sent an open offer of settlement to Mr Barber’s solicitors in similar terms to the terms of the decision agreed by the parties following the hearing except as to costs, that is that Mr Barber was successful in relation to ongoing liability but unsuccessful in relation to the further permanent impairment claim.  The Commission offered to pay $500 in relation to costs.

(b)On 3 August 2006, the Commission sent a letter headed “Without prejudice save as to costs” to Mr Barber’s solicitors repeating the terms of the offer of 5 April 2006 except the costs order changed to an offer to pay his reasonable costs as agreed, or, in default of agreement, as assessed.  A response was requested “as soon as possible”. 

(c)No evidence of any response by Mr Barber’s solicitors was provided to the Tribunal.

(d)On the afternoon of Friday 15 December 2006 the Commission’s solicitors sent a letter  to the Tribunal by facsimile with a “cc” to Mr Barber’s legal representatives also apparently by facsimile, in the following terms:

“The Respondent does not intend to defend the decision under review dated 12 October 2005, except insofar as it affirmed the determination dated 17 May 2005 that the Applicant has no entitlement to further compensation for permanent impairment pursuant to sections 24 and 27 of the Safety, Rehabilitation and Compensation Act 1988 in respect of back condition”.

This letter is on the Tribunal’s file with a “received” stamp stating the date and indicating a time of approximately 3.30 pm.

(e)Mr Richards stated from the Bar Table that this letter was received by his instructing solicitors or him at 5.30 pm the day before the hearing.  He no longer holds a physical brief in this matter.   We infer that it was actually the Friday afternoon 15 December 2006, before the Monday morning 18 December when the hearing was held.

(f)At the beginning of the hearing on 18 December 2006, the Commission conceded that Mr Barber continued to suffer symptoms of his compensable injuries.  The hearing proceeded on the basis that the only issue was Mr Barber’s entitlement to further lump sum compensation for permanent impairment.

(g)The Tribunal’s findings in summary were that Mr Barber continued to suffer the effects of his compensable condition but he was unsuccessful in his claim for further compensation for whole person impairment.

7.The Commission relied on the “Without Prejudice” letter dated 3 August 2006 to argue that the appropriate costs order was that the Commission pay Mr Barber’s reasonable party/party costs incurred up to and including 3 August 2006.

8.As we understand Mr Richards’ submissions on behalf of Mr Barber, they were:

(a)Section 67(2) of the Safety, Rehabilitation and Compensation Act 1988 (“the Act”) applied. That is, the proceeding had been rendered abortive because a decision had been made following a reconsideration under subsection 62(1), varying or revoking the reviewable decision the subject of the proceedings. Accordingly, the Commission was liable to reimburse Mr Barber for costs he had reasonably incurred in connection with “that proceeding”.

(b)Section 67(2) is mandatory.

(c)Section 67(2) does not restrict costs to party/party costs.

(d)Notwithstanding s 67(2), it was improper for the Commission to deny liability until the day before the hearing because the medical evidence supported Mr Barber’s claim, and the Commission has a statutory obligation to pay compensation under the Act.

(e)Such conduct was an attempt to force Mr Barber to withdraw his right to have the Tribunal determine whether he had any further entitlement to compensation for permanent impairment.

(f)If the Commission had accepted ongoing liability in August 2006 Mr Barber may not have proceeded with his claim for compensation for further permanent impairment. 

(g)An assertion in what appears to be a draft letter sent from Mr Richards to his instructing solicitors dated 16 January 2007 responding to a draft “request for Decision” stating  that “as your client is well aware, our client (Mr Barber) proceeded to hearing on advice that he was unlikely to lose on liability as the medical evidence supported him”.  Mr Richards repeated orally the assertion that Mr Barber acted on such advice.

(h)It was highly improper of the Commission to now “make assertions” that Mr Barber “not receive his reasonable costs of the hearing relating to liability as your client’s actions of continuing to deny liability forced him to prepare for a hearing on liability, and to obtain advice and retain Counsel in preparation for a hearing on liability.  It was your client’s choice not to send the facsimile aborting the proceeding until 5.30 pm on the last business day before the Hearing.”

(i)If the Tribunal accepts the Commission’s argument that no costs are payable after August 2006, “then the Tribunal will be supporting a Respondent who simply denies liability when a claim for permanent impairment is made and then makes an offer to re-instate liability in exchange for withdrawal of the permanent impairment claim as a method of avoiding paying the majority of an Applicants costs” which cannot be the intention of the legislation.

(j)There were two proceedings before the Tribunal.  A “Calderbank letter” cannot be in terms that require the relinquishing of a right in one proceeding (relevantly the permanent impairment claim) in return for the successful resolution of another proceeding (the ongoing liability claim).  We understood Mr Richards to accept that if there was only one proceeding before the Tribunal which included the two issues, this argument could not succeed.

Consideration

Section 67(2) of the Act

9.We accept Mr Richards’ argument that s 67(2) is “mandatory”. Put another way, we consider that it operates as a matter of law to impose liability on the responsible authority. However, we do not accept that this is a case to which s 67(2) applies. We do not consider that the facsimile of 15 December 2006 and/or the concession made on the morning of the hearing on 18 December were a “decision” following a reconsideration under s 62(1) “varying or revoking” the determination.  The “reviewable decision” the subject of the proceedings dated 12 October 2005 had not been revoked or varied.  The Tribunal was required to exercise its jurisdiction to make a determination in relation to the question of ongoing liability the subject of the reviewable decision, although the Commission did not contest what that finding should be as is evidenced by its concession and the terms agreed by the parties.

10.As we do not consider s 67(2) is applicable, it is unnecessary to consider the question of party/party costs in relation to it.

11.Submissions ‘d’ to ‘i’

In relation to submissions ‘d’ to ‘i’ outlined above, we do not consider that there was relevantly “impropriety” on the part of the Commission as alleged.  No authorities were provided to support these submissions.  We consider that submissions ‘e’, ‘f’, ‘g’ and ‘h’ inadvertently reflect the crux of this issue.  From April 2006 the Commission was prepared to agree to a decision which accepted ongoing liability but rejected the claim for permanent impairment.  If that was the outcome Mr Barber was prepared to accept, he could have accepted the offer in August, and received his costs to that date. 

12.There was no evidence of any response or counter offers on behalf of Mr Barber.  If a counter offer had been made agreeing to the ongoing liability concession but contesting the permanent impairment issue, the costs question in relation to the ongoing liability issue may have resolved or any counter-offer could have been taken into account on the question. 

13.In the absence of any response on behalf of Mr Barber, it cannot be said as Mr Richards asserted, that the Commission “forced” Mr Barber to prepare a case on liability.  In the absence of a response to its offers, we consider that the Commission was entitled to proceed as it did.   

The “Calderbank letter”

14.Mr Richards’ submission that a Calderbank letter cannot require the relinquishing of a right in one proceeding in return for the successful resolution of another proceeding was put on the basis that there were two “proceedings” before the Tribunal.  There was only one Tribunal file before us, N2006/850.  The Application For Review of Decision (PT1) attached a copy of the “Decision” made on 12 October 2005, the reviewable decision.  That decision included determinations in respect of both the ongoing liability and permanent impairment issues. 

15.No authority was put to support the submission.  We do not consider that there were two different proceedings before us.  There may have been some confusion because the file was transferred from the Queensland Registry where it had a different number.  There was only one application before the Tribunal.  We do not consider that there is any merit in this submission. 

16.Mr Richards did not seek to argue that the letter was not a “Calderbank” letter on the more usual bases such that it was insufficiently clear in its terms (see for example the discussion of Greenwood J in Perry v Comcare (2006) 90 ALD 526).

17.This Tribunal only has power to award costs of proceedings or part of those costs where the reviewable decision is varied in a manner favourable to the claimant or where a decision is set aside and a decision substituted which is favourable to the claimant (s 67(8)).   In this case, as a consequence of the Commission’s concession in relation to ongoing incapacity, that part of the reviewable decision has been revoked and a more favourable decision given.  The other aspect of the reviewable decision unfavourable to Mr Barber was affirmed.  

18.We do not consider it necessary or appropriate to determine whether the letter is a “Calderbank” letter on any basis other than that put to us by counsel for Mr Barber. Given its terms, it is relevant to our consideration of the appropriate order for costs within the discretion conferred by the Act whether it is a “Calderbank” letter or is not (see Perry, supra).    

19.For the reasons outlined earlier, we consider that the failure to respond to the 3 August offer was not a reasonable course for Mr Barber to pursue.  We consider that the policy objective of providing an incentive for parties to proceedings to end them as soon as possible and the related public policy of discouraging wasteful and unreasonable behaviour of parties are as applicable in this Tribunal as they are in judicial proceedings (see Spigelman CJ in Leichhardt Municipal Council v Green [2004] NSWCA 341 at paragraphs 14 and 15).

20.In the circumstances, we consider that the appropriate order for costs is that the Commission pay Mr Barber’s costs of the proceedings up to and including 3 August 2006, as agreed or taxed.  We would add that we do not consider that the discretion is confined such that an order must deal with each issue or part of a reviewable decision in a proceeding on the basis of whether the applicant is successful or not, although that is open.  The power is conferred in relation to the costs of “any proceedings”, which includes an application to the Tribunal for review of a decision (s 3 of the Administrative Appeals Tribunal Act 1975).

21.There was a further matter raised orally by Mr Richards on behalf of Mr Barber.He argued that there had been no determination on the issue of ongoing liability.    He said that he had called no evidence about it.  However, as a matter of fact, this remark overlooked the findings published by the Tribunal which included a finding on that issue based on the Commission’s concession, and that the decision agreed by the parties consequently dealt with the issue in accordance with our finding. 

I certify that the 21 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member,
Mrs Josephine Kelly

Signed: Ms Preethi Nimmagadda
   Associate

Date of Hearing   30 January 2007
Date of Written Reasons             6 February 2007
Solicitor for Applicant                   Darcy’s Solicitors
Counsel for the Applicant             Mr David Richards    
Solicitor for the Respondent        DLA Phillip Fox
Counsel for the Respondent        Mr Brendan Kelly