Brown and Comcare
[2011] AATA 606
•31 August 2011
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2011] AATA 606
ADMINISTRATIVE APPEALS TRIBUNAL ) No 2010/0086 & 2010/4978
)
GENERAL ADMINISTRATIVE DIVISION )
Re EMILY BROWN Applicant
And
COMCARE
Respondent
DECISION on costs order
Tribunal Professor RM Creyke, Senior Member Date31 August 2011
PlaceCanberra
Decision Comcare is to pay Ms Brown’s reasonable party/party costs and disbursements as agreed or assessed.
....................[sgd]..........................
Professor RM Creyke, Senior Member
CATCHWORDS
WORKERS’ COMPENSATION – COSTS – decision varied in favour of the applicant – application of section 67(8) Safety, Rehabilitation and Compensation Act 1988 – Calderbank offers by respondent – Tribunal’s decision less favourable than offers made – whether reasonable to reject offers – conduct of respondent’s legal representatives – costs awarded to applicant
Safety, Rehabilitation and Compensation Act 1988 (Cth) s 67, 114
Administrative Appeals Tribunal - Guide to the Workers’ Compensation Jurisdiction (2007)
Calderbank v Calderbank [1976] 3 All ER 333
Grabavac v Hart [1997] 1 VR 154
Griffiths v Australian Postal Corporation (2008) 47 AAR 190
Perry v Comcare (2006) 150 FCR 319
Quirk v Bawden (1992) 111 FLR 115
Re Hronopoulos and Telstra Corporation Ltd (2002) 68 ALD 419
REASONS FOR DECISION ON COSTS ORDER
31 August 2011 Professor RM Creyke, Senior Member
1. Ms Emily Brown applied to the Tribunal for review of two decisions denying her compensation for travel expenses under section 16 of the Safety, Rehabilitation and Compensation Act 1988 (Cth) (Act).
2. The Tribunal decided on 23 March 2011 to vary the decisions under review so that Comcare were liable to pay some of the travel expenses claimed, amounting to approximately $1,194.00.
3. Ms Brown seeks that Comcare should pay her legal costs and disbursements. Submissions on that issue have been received by both parties.
4. The sole issue for the Tribunal is whether Comcare should pay some or all of Ms Brown’s legal costs and disbursements.
Background
5. Ms Brown is a nurse. She was injured at work and Comcare accepted liability for her back condition on 30 September 2009. In accordance with that decision Ms Brown applied for reimbursement for travel expenses under section 16 of the Act for medical treatment for her accepted condition.
6. There were two applications for review. In claim number 2010/0086 Ms Brown sought reimbursement of travel expenses for 12 trips between Queanbeyan and Temora, NSW and between Temora and Wagga Wagga, NSW for the period 25 June 2009 to 9 October 2009. The total travelling expenses claimed were $1589.40. On 26 November 2009, Comcare accepted that claim. However, on 4 December 2009 Comcare revoked the initial decision. An overpayment of $1589.40 was raised.
7. In the second decision, claim number 2010/4978, Ms Brown sought reimbursement of travel expenses for travel between Temora and Queanbeyan, (NSW)/Oxley (ACT) in the period 20 July to 23 August 2010. In total, $4026.00 was claimed. That claim was rejected by Comcare on 6 October 2010, a decision upheld on review on 9 November 2010.
8. On 8 January 2010 Ms Brown applied to the Tribunal for review of the first decision; and on 16 November 2010, she sought review of the second decision. The two matters were heard together on 1 March 2011 as the facts underpinning them overlapped.
9. The Tribunal varied both decisions under review and accepted that Ms Brown should be reimbursed for four of her travel costs in matter 2010/0086 and two of her travel claims in matter 2010/4978 in the total amount of $1,194.00. Ms Brown had already been paid compensation for travel costs in the sum of $1589.40 for claim 2010/0086. As Comcare revoked its initial determination that sum became a debt due to the Commonwealth. As a result of the Tribunal’s decision, that debt reduced to $395.40. That amount is recoverable under section 114 of the Act. Nonetheless, in both cases the Tribunal varied the decisions under review ‘in a manner favourable to the claimant’ (section 67(8)(a) of the Act). At first sight that suggests that Ms Brown should be entitled to her legal costs and disbursements.
History of settlement offers
10. Before accepting the prima facie result, the history of the matter needs to be considered. Comcare made several offers of settlement in advance of the hearing. The first was on 6 September 2010; the second on 13 December 2010; the third on 24 December 2010; and a fourth on 13 January 2011. The first two offers related solely to matter 2010/0086; the last two included one of the journeys in matter 2010/4978. Each of the offers was expressly said to be ‘an offer made in accordance with the principles of Calderbank v Calderbank (1976) and without any admission’. A Calderbank offer, if accepted, has the advantage that for both parties it avoids the costs of litigation. None of the offers were accepted.
11. The offers each contained a statement:
.. if the offer is not accepted and the Applicant does not achieve an outcome in the Tribunal proceedings which is materially better than the terms of Comcare’s offer, as set out in this letter, Comcare will, in due course:
1. … oppose the Applicant being awarded costs on and from the date of this letter; and
2. apply to have any costs the Applicant would otherwise be awarded up to the date of this letter reduced by the amount of costs Comcare incurs from the date of this letter.
12. In addition, at a conciliation conference at the Tribunal on 11 August 2010, an offer was made by Comcare to pay all but two of the travel expenses listed in T35 in matter 2010/0086. Ms Brown would have been entitled to approximately $1,313.40 if that offer had been accepted. That agreement was not concluded. Ms Brown’s legal representatives said that they were prepared to accept the offer but ‘the matter could not be resolved to its finality because the two additional dates of 20 and 29 October 2009 could not be “signed off”’ by Comcare at the conference. In addition, when the representatives of Comcare sought approval for the terms of settlement, Comcare refused to agree, despite the parties having achieved a settlement ‘in principle’ at the conference.
13. A further settlement offer on 6 September 2010 was made by Comcare on less favourable terms. On 15 September 2010, that offer was not accepted because the terms differed significantly from those agreed at the conciliation conference. The claimant reaffirmed her willingness to accept the terms agreed at the conciliation conference in the letter of 15 September 2010 noting that these terms included journeys to be claimed in matter 2010/4978, which were not yet before the Tribunal.
14. The offer by Comcare made on 24 December 2010 and repeated on 13 January 2011, would have entitled Ms Brown to approximately $1,560.00 plus travel on 20 July 2009 in matter 2010/4978.
15. The claimant contends that none of the offers made by Comcare on an individual basis are the same or substantially the same as the decision of the Tribunal. It was submitted by Ms Brown, following a discussion of the case law, that she had not failed on any discrete issue and it was not appropriate to apportion costs. Her assertion was that the reviewable decision on the only discrete issue, whether she was entitled to compensation for travelling for medical treatment, was incorrect. The Tribunal held that the reviewable decision was partially incorrect. Accordingly the Tribunal’s decision was ‘more favourable’ than the decision under review, and that being the case, Ms Brown argued that Comcare should pay her reasonable costs as agreed or taxed in accordance with the Tribunal’s General Practice Direction.
16. The Tribunal’s General Practice Direction (2007) states simply: ‘In general, the parties in Tribunal proceedings must bear their own costs’.
17. Comcare submits in response to Ms Brown’s first contention:
None of the offers made by it needed to be the same or substantially the same as the decision of the AAT. All that is required for the AAT to rely on Comcare’s offers, in deciding to not award costs for particular parts of the proceedings, is that the offers be more favourable to the Applicant than the result she achieved at hearing. The judgment in Calderbank v Calderbank [1975] 3 All ER 333 makes this position clear. Likewise, Comcare’s offers of settlement made very clear to the Applicant the likely consequences of her refusal to accept them. The Applicant unreasonably failed to accept Comcare’s offers and, accordingly, she ought to not be awarded the whole of the costs of her proceedings.
18. Comcare also submitted that taking account of the principles in Perry v Comcare (2006) 150 FCR 319 (see below) and comments of the Tribunal in Re Hronopoulos and Telstra Corporation Ltd (2002) 68 ALD 419 at 421 concerning the need for parties to approach a conciliation conference in a realistic manner, it was not appropriate for Ms Brown to be awarded the whole of her costs of her proceedings.
19. Comcare submitted that by refusing to accede to the outcome reached in the conciliation conference and rejecting the subsequent offers of settlement, Ms Brown unreasonably failed to take account of opportunities to finalise the matter, thereby exposing Comcare to additional and unnecessary costs and expense.
20. In response to Ms Brown’s argument that as she had not failed on any discrete issue, costs should not be apportioned, Comcare responded:
[I]t is not to the point that the Applicant may or may not have failed on discrete issues. The critical point is that the overall outcome the Applicant achieved in the proceedings was less favourable to her than the offers it made at the conciliation conference and at later times. … It is Comcare’s submission … that the Applicant is not entitled to the whole of her costs of the proceedings based on the Calderbank offers made to her.
21. The Tribunal accepts that individual components of an overall claim for journeys to seek medical treatment compensable as rehabilitation costs under section 36 of the Act are not ‘discrete issues’ for the purposes of that principle.
22. Comcare ultimately claimed that the appropriate order was:
·‘Comcare is to pay the Applicant’s reasonable party/party costs as agreed or taxed in application 2010/0086 up to and including 11 August 2010;
·The Applicant is otherwise to bear her own costs of her two proceedings’.
In the alternative
·Comcare is to pay the Applicant’s party/party costs as agreed or taxed up to and including 13 December 2010 after which any costs the Applicant would otherwise be awarded are reduced by the amount of costs Comcare incurred as and from that date.
Consideration
23. The Act provides for the payment of costs. The primary rule as set out in section 67(1) of the Act is that ‘the costs incurred by a party to proceedings instituted under Pt VI before the Tribunal shall be borne by that party’. That rule is intended to be given primacy.[1] The relevant exception to the general rule is found in section 67(8) which provides that:
Where, in any proceedings instituted by the claimant, the Administrative Appeals Tribunal makes a decision (a) varying a reviewable decision in a manner favourable to the claimant … the Tribunal may, subject to this section, order that the costs of those proceedings incurred by the claimant, or a part of those costs, shall be paid by the responsible authority.
[1]Perry v Comcare (2006) 150 FCR 319 at 338.
24. That exception grants the Tribunal discretion to vary the primary rule that each party must bear their own costs and to order that some or all of the costs in a proceeding shall be paid by the ‘responsible authority’,[2] in this case, Comcare. In Perry v Comcare Greenwood J found that in exercising the discretion:
..the Tribunal ought to have regard to the rule of primacy reflected in section 67(1), the circumstances of the case which gave rise to a decision enlivening the qualification upon section 67(1), the background circumstances concerning the claim, the nature and character of proceedings for the purposes of the SRC Act, the complexity of the claim and the conduct of the parties in relation to the proceedings.[3]
[2] Safety, Rehabilitation and Compensation Act 1988 (Cth) s 67(1A).
[3] Perry v Comcare (2006) 150 FCR 319 at 339.
25. The background circumstances concerning the claim and the conduct of the parties in relation to the proceedings are relevant in this application. The nature and character of the proceedings and the complexity of the claim are not. There was nothing special or complex about the matters at issue; they were simply a claim for reimbursement of travel costs.
26. The Tribunal’s Guide to the Workers’ Compensation Jurisdiction (2007), in discussing costs under section 67 of the Act, notes:
In exercising this discretion, the Tribunal may take into account a range of matters including whether the applicant has incurred unnecessary costs or the applicant has caused the respondent to incur unnecessary costs in the proceeding.
27. In addition, the Tribunal notes Comcare’s Jurisdictional Policy Advice No 2004/04 ‘Use of Calderbank offers and submissions concerning legal costs at the Administrative Appeal Tribunal’ (Policy Advice). The Policy Advice states in clause 20:
As with Calderbank offers, determining authorities are reminded that submissions to the Tribunal requesting that the Tribunal use its discretion not to award all or part of legal costs should only occur where the conduct of the determining authority and its legal representatives has been exemplary.
28. The Policy Advice also states in clause 19:
The timing of a Calderbank offer and the period of time for which an offer is open should be realistic. Preferably an offer would not be made when other circumstances surrounding the matter would prevent serious consideration from being given to that offer. Additionally a reasonable period of time needs to be provided for the offer to be considered in a reasonable manner before a decision must be made.
These principles are in line with the Model Litigant Directions issued by the Attorney-General’s Department.
29. In the compensation jurisdiction of the Administrative Appeal Tribunal, it is accepted that if a Calderbank offer is made by the respondent, the offer is relevant to the discretion in relation to a costs decision.[4] However, the existence of the Calderbank offer cannot be determinative given the overriding statutory code in section 67.[5] In considering the offer, the Tribunal should also take into account the Policy Advice when assessing the conduct of Comcare and its legal representatives.
[4] Griffiths v Australian Postal Corporation (2008) 47 AAR 190 at 194 citing Perry v Comcare (2006) 150 FCR 319 at 335.
[5] Perry v Comcare (2006) 150 FCR 319 at 338.
30. In addition, before the offer can be accepted as a Calderbank offer the terms of the offer must be ‘clear, precise and certain’.[6] That requirement applies to the terms of the offer, the time within which the offer must be accepted, an indication that the offer is being made in accordance with the principles in Calderbank v Calderbank, and that there is some provision for costs separate from the principal claim.[7] The Tribunal finds that all four offers by Comcare met these requirements and left no reasonable doubt as to the nature and extent of what was being offered.[8]
[6] Perry v Comcare (2006) 150 FCR 319 at 327.
[7] Grabavac v Hart [1997] 1 VR 154 at 155.
[8] Id at 160--161.
31. In a letter dated 15 September 2010 the claimant reaffirmed her willingness to accept the terms of settlement agreed in the conciliation conference, subject to the need for the ‘sign off’ in relation to travel on two of the dates. This letter, in the context of the conciliation conference and the subsequent settlement offers, also complied with the requirements of clarity, precision and certainty and is entitled to be regarded as a counter-offer to the Calderbank offer.
Background circumstances and conduct of parties
32. The application for review in matter 2010/0086 was made on 8 January 2010; a hearing was scheduled for 21 December 2010. That hearing was vacated on request to enable matter 2010/4978 to be joined. The application in matter 2010/4978 was made on 16 November 2010, that is, after the conciliation conference in August 2010 and the letter of settlement of 6 September 2010. The claims for further travel expenses in matter 2010/4978 related to the same accepted condition and the Tribunal considered that joinder of the matters was reasonable. The hearing was rescheduled for 1 March 2011. The hearing was held on that day and the decision was published on 23 March 2011.
33. The history of the pre-hearing negotiations is as follows:
·A conciliation conference was held on 11 August 2011 and an ‘in principle’ agreement was reached at the conference. The settlement related to the claim for 12 journeys in matter 2010/0086 but included two other journeys which had not then been considered by Comcare and as to which the Tribunal had no jurisdiction;
·An offer of settlement was made by Comcare on 6 September 2010 relating solely to matter 2010/0086. The offer was significantly less than was agreed at the conciliation conference;
·A counter-offer was made by the claimant on 8 September 2010, also relating to matter 2010/0086 and reaffirming willingness to return to the terms of the in principle settlement, if necessary, omitting the two items which had not been considered by Comcare;
·The offer of 6 September 2010 was rejected by Ms Brown on 15 September 2010;
·A neutral evaluation, a form of pre-hearing dispute settlement by the Tribunal, was published on 10 November 2010 relating solely to matter 2010/0086 but the matter did not settle;
·A further offer of settlement was made by Comcare on 13 December 2010 relating solely to matter 2010/0086, for acceptance on or before 20 December 2010. The terms of this offer were akin to the terms agreed in principle at the conciliation conference. The offer was not accepted;
·Following a telephone directions hearing on 22 December 2010, another offer was made by Comcare on 24 December 2010, on this occasion relating to both matters 2010/0086 and 2010/4978. The offer had to be accepted by 17 January 2011;
·A further offer by Comcare in almost the same terms as the offer of 24 December 2010 was made on 13 January 2010, also to be open until 17 January 2011. The offer was not accepted.
Reasonableness of both parties
34. In assessing the reasonableness of the steps taken in the various dispute settlement negotiations, it is pertinent to note that until 24 December 2010, no offer was made which related to both matters. Hence it was reasonable for neither party to agree to the terms negotiated at the conciliation conference given that the application in matter 2010/4978 had not then been fully determined, and the same applies to the settlement offers up to and including the offer of 13 December 2010. Nonetheless, there is other conduct the reasonableness of which needs to be considered.
35. The settlement negotiations of the matter was protracted but not unreasonably so given the decision to join both matters, which did not occur until November 2010. No criticism of the conduct of either party can be made in this regard. Until the offer of 24 December 2010, no offers of settlement either at the conciliation conference or subsequently related to both claims. So it is only at that point that the discretion needs to be exercised.
Reasonableness of Comcare’s conduct
36. The Tribunal has considered this issue over the history of the negotiations taking into account the terms of clauses 19 and 20 of Comcare’s Policy Advice, which set a standard of conduct for Comcare and its legal representatives.
37. Starting with the conciliation conference, the Tribunal notes that Comcare had not, as is the expectation at such a conference, authorised its representative to accept the terms agreed. That left it open for Comcare to reject the settlement, which it did, after the ‘in principle’ agreement had been reached. The limited authorisation undermined the capacity of the parties to participate effectively.
38. Comcare then made a settlement offer on 6 September 2010 which significantly reduced the amount of the conciliation settlement. The amount of the settlement offer was roughly two-thirds of what had been agreed at the conciliation conference. This later offer raised further doubts about the appropriateness of the ‘in principle’ agreement by Comcare’s representatives at the conciliation conference.
39. The inconsistency of Comcare’s approach was again apparent when Comcare’s later offers in December 2010 and January 2011, reverted to terms more akin to those at the August conciliation conference.
40. Finally, the Tribunal notes that the first settlement offer made by Comcare was posted on 24 December 2010, the day prior to the seasonal shutdown of businesses. Ms Brown was given until 17 January 2011 to respond. It appears from the date stamp of 11 January 2011 on the letter that the offer may not have been received until that day. Assuming that delivery date is correct, Ms Brown only had 6 days within which to respond. Given the difficulty at times in contacting parties at that time of year, this timing was on the verge of being unreasonable. The settlement offer made on 13 January 2011 with a response date of 17 January 2011 was clearly unreasonable.
41. In sum, these facts support a finding by the Tribunal that Comcare and its legal representatives could not claim that their conduct throughout the negotiations ‘has been exemplary’.
Reasonableness of Ms Brown’s conduct
42. In this context, the matters suggested by Comcare as relevant are:
·that as Ms Brown ultimately received less than the offer made on 24 December and repeated in January 2011 it was unreasonable for her not to accede to that offer;
·that at the hearing Ms Brown resiled from a position that she had not relocated to Temora between June and November 2010 and this was unreasonable; and
·it was unreasonable of her not to have made further efforts to locate a general practitioner in the Canberra region rather than relying on her former practitioners in Temora.
43. As to the first, given that the amounts offered in December and January 2011 were not substantively or materially different from the amounts Ms Brown received as a result of the Tribunal’s decision, to have rejected the offers was not unreasonable. As Higgins J said in Quirk v Bawden (1992) 111 FLR 115 at 122:
Most litigation … admits of a range of outcomes. Which of those outcomes will ultimately be reflected in the final judgment is a matter upon which the parties might reasonably differ. Indemnity costs should not be used to inhibit either party from litigating an issue reasonably in contention between them. However, neither should parties be permitted to persist in an unrealistic assessment of the chance that the issue or issues in dispute will be determined favourably to them when that view is able to be perceived as unrealistic.
44. In Ms Brown’s case, the final judgment was not so far below what she ultimately received to indicate that her persistence was unrealistic. Nor was it unreasonable for her to have sought a finding on the issues.
45. The second issue is her acceptance at the hearing of the fact that she had relocated to Temora between June and November 2010. It was suggested her initial position which was that she was just visiting her former home during this period, was inconsistent with her knowledge of the relevant facts, and therefore her behaviour was unreasonable. The Tribunal takes into account that Ms Brown was a relatively young woman (20 years old) at the time of the claim; the issue of where was her place of residence is a technical legal issue and one on which she was likely to have relied on her legal advisers. Nonetheless, her initial stance on the issue of her place of residence does raise the possibility that she was trying to maximise the compensation payable by her choice of location of her residence during this time.
46. The third issue is whether she made sufficient efforts to find a general practice in Canberra which would accept her as a patient. Had Ms Brown’s established place of residence been found to be Queanbeyan, she could well have made more assiduous efforts to find a practice in Queanbeyan or Canberra. So Ms Brown’s conduct was also not above criticism. The Tribunal takes into account, however, that unlike Comcare, she is not subject to the same policy enjoining her to ‘exemplary conduct’, nor to Model Litigant principles of the kind applying to that agency.
47. Nonetheless, since Comcare’s Calderbank offer in September 2010, Ms Brown has been aware that if she did not achieve a more advantageous outcome at a hearing than was offered by Comcare, there would be an application that Comcare not meet all her legal costs and disbursements due to the extra costs of the hearing which would be entailed. The Tribunal gives some weight to this factor and the fact that Ms Brown was aware that she could face the risk of not achieving the most beneficial outcome as to costs if she persisted in going to hearing.
48. Comcare has argued that in accordance with the terms of its Calderbank offer of those dates, as the findings in the matters was ultimately less favourable to Ms Brown than the terms of their offer, she should not be entitled to her reasonable legal costs and disbursements. Nonetheless, as the offers were not so much in excess of the amount she ultimately received, that refusal of the initial offer can be seen with hindsight to not have been unreasonable.
49. In summary, in view of the amount the Tribunal found she was entitled to, and the fact that the amount differed only marginally from the settlements amounts offered in all but the September offer, the range of outcomes likely, and the legitimate doubts involved in the issue of her place of residence, it was not unreasonable for Ms Brown not to have accepted the settlement offers. The result was also one which also met the statutory test since the decision was ‘favourable to the claimant’ (section 67(8)(a) of the Act).
50. At the same time, Comcare’s conduct in relation to the conciliation conference, its markedly reduced offer in September 2010, and the timing of the final two settlement offers during the Christmas holiday period, including the time its offers remained open for acceptance, did not approach the standard expected under the Model Litigant Policy and Comcare’s Policy Advice. In these circumstances, the Tribunal orders that the costs of these proceedings incurred by the claimant shall be paid by Comcare.
I certify that the 50 preceding paragraphs are a true copy of the reasons for the decision herein of Professor RM Creyke, Senior Member
Signed: ............................[sgd]..................................................
Caitlin Baillie, AssociateDate of Hearing 1 March 2011
Date of Costs Decision 31 August 2011
Solicitor for the Applicant Mark David Howard
Stacks, the Law Firm
Solicitor for the Respondent Luke Woolley
Sparke Helmore Lawyers
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