Cakir and Comcare
[2008] AATA 103
•8 February 2008
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2008] AATA 103
ADMINISTRATIVE APPEALS TRIBUNAL )
) No A2007/0915
GENERAL ADMINISTRATIVE DIVISION ) Re LISA-MAREE CAKIR Applicant
And
COMCARE
Respondent
DECISION
Tribunal Mr S. Webb, Member Date8 February 2008
PlaceCanberra
Decision The Tribunal orders Comcare to pay Ms Cakir’s reasonable costs of proceedings in the application 2007/0915. The costs payable may include:
(a) witness expenses at the prescribed rate;
(b) all reasonable and proper disbursements; and
(c) 75 percent of all professional costs, including counsel’s fees which would be allowable under the Federal Court Rules on a party and party basis.
The costs may be agreed between the parties, but in the absence of agreement the bill will be taxed by a Registrar of the Tribunal.
..........signed....................................
Mr S. Webb, Member
CATCHWORDS
COMPENSATION – decision favourable to applicant – award of costs – written offer of settlement – terms of offer exceed scope of review – no basis to award costs on indemnity basis – discretion – costs order
Safety, Rehabilitation and Compensation Act 1988 s 67
Calderbank and Calderbank [1976] Fam 93
Riley v Commission for the Safety, Rehabilitation and Compensation of Commonwealth Employees (1994) 48 FCR 449
Comcare v Labathas (1995) 133 ALR 744
Perry v Comcare (2006) 150 FCR 319
Miller v Australian Telecommunications Commission (1985) 5 FCR 480
Re Maley and Comcare AAT (1998) 27 AAR 100
NMFM Property Pty Ltd v Citibank Ltd (No. 11) [2001] FCA 480
Re Gertzos and Comcare (AAT, 13 April 1994, A 93/22, unreported)
EMI Records Ltd v Ian Cameron Wallace Ltd and Another [1982] 2 All ER 980
Colgate Palmolive Co and Anor v Cussons Pty Ltd (1993) 118 ALR 248
Lees v Comcare (1999) 56 ALD 84
Griffiths v Australian Postal Corporation [2008] FCA 19
Australian Postal Corporation v Oudyn (2003) 73 ALD 659
REASONS FOR DECISION
8 February 2008 Mr S. Webb, Member 1. Lisa-Maree Cakir claimed compensation in relation to a right upper limb and shoulder injury. Comcare decided to reject her claim by primary determination[1] and on reconsideration[2], on the basis that her Commonwealth employment did not materially contribute to cause an ‘injury’ for the purposes of the Safety, Rehabilitation and Compensation Act 1986 (the Act). Ms Cakir applied to the Tribunal for review of that decision. The substantive matter was heard by me on 14 and 15 November 2007 and a decision favourable to Ms Cakir was handed down on 5 December 2007. No orders were made in relation to costs and the parties were invited to make submissions on that subject.
[1] T19.
[2] T21.
2. Submissions were duly received from both parties.
3. Thus, the only matter for determination is the issue of costs.
4. In Ms Cakir’s submission, during the course of the proceedings in the Tribunal two offers of settlement were made in writing to the Respondent – dated 21 May 2007 and 27 September 2007. Both letters have been filed by Ms Cakir’s solicitor and are not privileged communications. Both letters are headed “WITHOUT PREJUDICE SAVE AS TO COSTS”. The relevant terms of the letter dated 21 May 2007 are:
The applicant has instructed that she would be prepared to accept a settlement of her claim based on the following terms:-
1. The reviewable decision dated 6 March 2007 be set aside. In substitution the parties agree:-
i. The respondent will pay incapacity payments to the applicant in respect of the period 18 July-4 November 2006;
ii. The respondent will pay the applicant’s treatment expenses in respect of the period 18 July-1 June 2007;
iii. The respondent to pay the applicant’s party/party costs to be taxed or agreed.
This offer will remain open for acceptance by the respondent until 8 June 2007 following which it will be withdrawn.
If the applicant’s claim proceeds to hearing and (as we anticipate) the applicant receives an outcome from the Tribunal more favourable than above, we are instructed to tender this letter in support of an application that the respondent pay the applicant’s legal costs on an indemnity basis from the date of this letter.
The letter dated 27 September 2007 contains identical terms but the last quoted paragraph is replaced by the following:
If the applicant’s claim proceeds to hearing and (as we anticipate) the applicant receives an outcome from the Tribunal commensurate and/or more favourable than the above, we are instructed to tender this letter in support of an application that the respondent pay the applicant’s legal costs at 100% Federal Court scale from the date of this letter.
This offer will remain open for acceptance by Comcare until 5pm on 18 October 2007, following which it will be withdrawn.
5. In her submissions Ms Cakir describes these letters as ‘Calderbank offers of settlement’, after the decision in Calderbank v Calderbank [1976][3]. Comcare did not respond positively to these offers. Ms Cakir is seeking an order “that the Respondent pay the Applicant’s costs up until 5.00pm on 21 May 2007 on a party/party basis at three quarters of the Federal Court scale (including Counsel’s fees) and that the Respondent pay the Applicant’s costs incurred thereafter on a solicitor client basis at 100% of the Federal Court scale (including Counsel’s fees), and that all other reasonable disbursements be paid in full”[4]. Comcare opposes that submission.
[3] Fam 93.
[4] Applicant's submissions, 13 December 2007, p3.
6. In the normal course, each party to proceedings before the Tribunal shall bear their own costs (subs 67(1) of the Act). However, section 67 of the Act provides a code in relation to costs (Riley v Commission for the Safety, Rehabilitation and Compensation of Commonwealth Employees (1994)[5]). Subs 67(8) confers discretion on the Tribunal to order the responsible authority (in this case, Comcare) to pay a claimant’s costs if the application is decided in terms that are more favourable to the Applicant. That discretion is curtailed in cases in which the reviewable decision is set aside and the particular matter is remitted to the determining authority for re-determination (subs 67(9)). Exercise of the discretion is essentially preconditioned by an outcome of the particular proceedings that is more favourable to a claimant than the decision under review, whether by varying or setting aside that decision. However, exercise of the discretion, once enlivened, is not mandated by the preconditioning factor alone. In order to alter the balance struck by subs 67(1) it is necessary to first consider the particular circumstances of the case. The nature and character of the proceedings, the complexity of the claim, the circumstances in which the costs were incurred, and the behaviour of the parties must be taken into account[6]. This is to be done with an eye to the requirements for justice and fairness in the particular case[7].
[5] 48 FCR 449.
[6] Comcare v Labathas (1995) 133 ALR 744, at 750-751.
[7] Perry v Comcare (2006) 150 FCR 319, at [62]-[77].
7. When determining a claimant’s entitlement to costs, the Tribunal must consider the whole of the circumstances of the particular case and not just matters concerning the conduct of the litigation. The appropriate principles to apply when exercising the discretion to award costs are those that apply to the awarding of costs by a court (Miller v Australian Telecommunications Commission (1985)[8]).
[8] 5 FCR 480.
8. Where it is appropriate to make a costs award under subs 67(8), ordinarily costs are awarded at 75 percent of the Federal Court Rules Scale on a party and party basis, consistent with the Tribunal’s Practice Direction, Guide to the Workers’ Compensation Jurisdiction. The Practice Direction relevantly states that:
Unless the order states otherwise, the costs payable may include:
· witness expenses at the prescribed rate;
· all reasonable and proper disbursements; and
· professional costs allowable in accordance with any scale of costs determined by the Tribunal, or, if there is no such scale, 75 per cent of all professional costs, including counsel's fees, which would be allowable under the Federal Court scale.
In the absence of any order to the contrary, costs will be assessed on a party and party basis. [9]
[9] Administrative Appeals Tribunal Website, Practice Directions and Guides: Guide to the Workers’ Compensation Jurisdiction, 26 March 2007, at: < certain circumstances, the Tribunal may determine that it is appropriate to order payment of costs above the 75 percent threshold. In Re Maley and Comcare[10], for example, the Tribunal awarded costs at 100% of the scale. In that case, Comcare made a decision to reject Mr Maley’s claim without investigating and applying the relevant Defence Force Rules concerning the particular payment sought, and the matter proceeded without any investigation of the facts relevant to the payment claimed. Mr Maley reasonably attempted to obtain the relevant information, and informed Comcare, in the form of a Calderbank letter, that if successful in the Tribunal he would seek an order for costs on an indemnity basis. A directions hearing was held that would have been unnecessary if the relevant information had been properly investigated and provided. The matter proceeded to hearing and was resolved in a manner favourable to Mr Maley. I note in passing that the Tribunal did not accept Mr Maley’s submissions for the award of costs on an indemnity basis.
[10] AAT (1998) 27 AAR 100.
10. Even though in the present case Ms Cakir’s letter dated 21 May 2007 makes reference to a possible claim for costs on an indemnity basis, I understand from the submissions filed by her solicitor that a claim for indemnity costs is not pressed. Nevertheless, Ms Cakir is claiming costs on a solicitor and client basis from 21 May 2007.
11. The established practice in the Tribunal and the courts is that ordinarily costs will be ascertained on a party and party basis. As Lindgren J said in NMFM Property Pty Ltd v. Citibank Ltd (No. 11)[11]: “the ordinary rule that applies is that an award of costs is on the party and party basis, and that it is only in a special case that the discretion to depart from that rule will be properly exercised”[12]. The assessment of costs on a party and party basis addresses only costs that are necessary to enable the conduct of the litigation and no more, whereas it is generally understood that the assessment of costs on a solicitor and client basis is more generous in scope, addressing costs reasonably incurred, but not to the extent of solicitor and own client or total indemnity costs (see EMI Records Ltd v Ian Cameron Wallace Ltd and Another [1982][13]). Nevertheless, as will appear, it is not necessary to resolve any point of definition for present purposes. Even if the Tribunal has discretion to award costs on an indemnity or solicitor and client basis for the purposes of subs 67(8), it would only be appropriate to make such an award in a special case. For example, a case in which the responsible authority has maintained the action for an ulterior purpose, or with wilful disregard for known facts or clearly established law; if deliberately false allegations of fact have been made; or if that party has imprudently rejected an offer of compromise and has engaged in delinquent conduct grossly prolonging and increasing the cost of the proceedings (see Colgate Palmolive Co and Anor v Cussons Pty Ltd (1993)[14]; NMFM Property Pty Ltd v Citibank Ltd (No. 11) [2001][15]). There is no evidence to support any such contention in the present case.
[11] [2001] FCA 480.
[12] Ibid, at [56].
[13] 2 All ER 980.
[14] 118 ALR 248, at 253-254.
[15] FCA 480, at [62]-[63].
12. With regard to Calderbank offers, there is no general rule or binding authority on the Tribunal that rejection of such an offer precludes that party from obtaining costs, or in the converse (as presently relevant) that rejection of such an offer by a determining authority necessitates an award of costs to a successful claimant at a higher level that ordinarily would apply. However, such offers may be relevant to take into account when considering issues concerning costs (Perry v Comcare[16]). The common law principles governing the construction of such offers are well established. The offer should be clear, precise, certain and capable of acceptance, leaving no room for reasonable doubt about the terms of settlement offered and presenting the recipient party with a clear choice: settle on the specified terms or proceed knowing the risk of not achieving a better result, including in relation to costs. As can be seen, the two letters to which Ms Cakir refers specify the terms of settlement proposed. Reference is made to payment of Ms Cakir’s costs as agreed or taxed at the date of each letter. It is likely that the terms are sufficiently clear to convey to Comcare the nature and extent of the settlement proposed and the likely claim for costs that may result if the matter proceeded and Ms Cakir did not achieve a better result.
[16] Above n 7.
13. However, I am not prepared to accept that the letters set out the terms of any meaningful compromise that could be accepted by the Tribunal in relation to the matters that were before it for determination. The sole issue before the Tribunal in the substantive proceedings was one concerning liability simpliciter for the injury claimed by Ms Cakir. This was a threshold question pursuant to s.14 of the Act that was the subject of primary determination and reconsideration by Comcare, that did not extend to determination of Ms Cakir’s entitlements under any particular head of compensation under the Act, for example in relation to incapacity or medical treatment expenses. Thus, simply put, either Comcare was liable to pay compensation to Ms Cakir in relation to the injury, in which case her particular compensation entitlements would need to be determined by Comcare under relevant sections of the Act, or there was no liability for the claimed injury against Comcare. The case resolved in Ms Cakir’s favour and it is for Comcare, and not the Tribunal, to determine Ms Cakir’s entitlements to particular compensation for incapacity and medical treatment expenses. Following the principle in Lees v Comcare (1999)[17] which prevents the Tribunal from exercising any powers or discretions which were not available to the authority making the reviewable decision, the Tribunal had no jurisdiction to determine issues concerning incapacity for work and medical treatment expenses (I note the observations of Madgwick J in Griffiths v Australian Postal Corporation [2008][18]).
[17] 56 ALD 84.
[18] FCA 19, at [15]-[16].
14. Thus, when one considers the terms of the settlements proposed by Ms Cakir in May and September 2007, it is plain enough that the settlement was effectively in excess of what she could achieve in the Tribunal proceedings and the Tribunal could not have accepted the proposed terms. For that reason I am satisfied that the purported Calderbank letters were of no effect. Nevertheless, the offers of settlement are matters that are relevant for me to take into account for present purposes (Griffiths v Australian Postal Corporation[19]).
[19] Ibid, at [12].
15. The substantive case was one concerning the aetiology of symptoms complained of by Ms Cakir and the extent to which her employment contributed to cause those symptoms. As is common in such cases, the opinions of Ms Cakir’s treating therapists and doctors, and medical experts who examined and reported on her condition, diverged on matters of diagnosis and causation. Issues concerning Ms Cakir’s credit arose from variations in her description of symptoms and circumstances as reported.
16. Simply put, there were opposing opinions concerning issues relevant to the central question of liability against Comcare that was before the Tribunal for determination, and it was reasonable for Comcare to proceed to test these opinions and not concede the matter on the terms proposed by Ms Cakir.
17. The testing of opinion evidence supporting a reasonable argument in proceedings is not a practice that should be discouraged by imposition of a cost penalty. Similarly, where there are issues of credit concerning a claimant arising on reasonable grounds, the practice of testing the reliability of the claimant’s evidence at hearing before the Tribunal should not be discouraged by imposing a cost penalty. Furthermore, if a party in proceedings chooses to rely on expert opinion, properly obtained, that is a minority opinion in the available evidence, the weight to be given to that opinion is a matter for the Tribunal to consider when assessing all of the evidence. Proceeding on that basis is not necessarily unreasonable or a ground for increased costs. Nevertheless, one would expect parties to undertake a proper evaluation of all of the evidence and, if necessary, to obtain further expert opinion in a timely manner at an early stage in Tribunal proceedings.
18. In the circumstances and having careful regard to the primary determination and the reconsideration that was undertaken by Comcare, and the scope and likely quantum of Ms Cakir’s claim, I am satisfied that Comcare properly applied itself and did not act unreasonably when considering, investigating and determining Ms Cakir’s claim. There is no evidence that Comcare did not undertake appropriate investigations or was in any way delinquent in the conduct of the proceedings in the Tribunal. One cannot expect a party to concede a claim simply because the scope or quantum of the claim is not great. However, as well as good law, one may expect commonsense to apply, especially in a case involving divergent medical opinions where the ultimate cost of proceedings may exceed the quantum of the claim.
19. There is no evidence before me that Comcare proceeded with the case for an ulterior purpose, or with wilful disregard for known facts or clearly established law. No deliberately false allegations of fact have been made. Even though, ultimately, the extent of Comcare’s liability in relation to Ms Cakir’s injury, in terms of incapacity or medical treatment expenses for example, may not be great, the extent of that liability cannot be assessed with certainty. Ms Cakir’s offers of settlement do not close off any future claims in that regard[20]. Furthermore, it is difficult to identify any meaningful compromise by way of settlement in their terms. Comcare’s case was supported by expert medical opinion. I am satisfied that Comcare’s decision not to concede the matter was not imprudent and did not unreasonably prolong or increase the cost of the proceedings.
[20] Australian Postal Corporation v Oudyn (2003) 73 ALD 659
20. Thus in sum, the case was not complex in law and was not impeded or delayed by any unreasonable conduct. There was nothing to set it apart from the usual run of such cases. The terms of Ms Cakir’s offers of settlement were in excess of what she could achieve in the Tribunal proceedings. Ultimately, the result she achieved was not more favourable than the terms offered. It was reasonable for Comcare to proceed to test the evidence at hearing, ventilating issues concerning Ms Cakir’s credit and divergence of opinion in the medical evidence, thereby assisting the Tribunal to determine the threshold question of liability in relation to the claimed injury.
21. There is no basis, therefore, to depart from the ordinary practice of the Tribunal in relation to orders for costs pursuant to subs 67(8) of the Act. Ms Cakir’s submissions for costs from 21 May 2007 on a solicitor client basis at 100 percent of the Federal Court Scale are rejected. Nevertheless, considering the nature and character of her claim and the decisions successfully challenged in these proceedings, it is appropriate that Comcare should pay Ms Cakir’s reasonable costs pursuant to subsection 67(8) of the Act on the basis of and in conformity with the established practice of the Tribunal in relation to such an order.
22. Thus, for these reasons, I order Comcare to pay Ms Cakir’s reasonable costs of proceedings in the application 2007/0915. The costs payable may include:
(i)witness expenses at the prescribed rate;
(ii)all reasonable and proper disbursements; and
(iii)75 percent of all professional costs, including counsel’s fees which would be allowable under the Federal Court Rules on a party and party basis.
The costs may be agreed between the parties, but in the absence of agreement the bill will be taxed by a Registrar of the Tribunal.
I certify that the 22 preceding paragraphs are a true copy of the reasons for the decision herein of Mr S. Webb, Member
Signed: .................................................................
Jane Gribble
AssociateDate of decision 8 February 2008
Solicitor for the Applicant Andrew Finlay
Pamela Coward Higgins Lawyers
Solicitor for the Respondent Andrew Shelley
Sparke Helmore Lawyers
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