Kleintz, Bernadette v Eathorn and Wan Pty Ltd

[2009] VCC 1781

IN THE COUNTY COURT OF VICTORIA Unrevised

Not Restricted

AT BENDIGO
CIVIL DIVISION

DAMAGES - COMPENSATION

Case No. CI-09-02032

BERNADETTE KLEINTZ	Plaintiff
(as Executor of the Estate of the Late FRANCIS MICHAEL KELLY)
v
EATHORNE and WAN PTY LTD	Defendant

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JUDGE:	HIS HONOUR JUDGE O'NEILL
WHERE HELD:	Bendigo
DATE OF HEARING:	30 October 2009
DATE OF JUDGMENT:	26 November 2009
CASE MAY BE CITED AS:	Kleintz, Bernadette v Eathorn & Wan Pty Ltd
MEDIUM NEUTRAL CITATION:	[2009] VCC 1781

REASONS FOR JUDGMENT

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Catchwords: ACCIDENT COMPENSATION – entitlement of solicitors for a worker to legal costs pursuant to WorkCover Legal Costs Order 2006 – s.134AG and s.135BA Accident Compensation Act 1985.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr J B Richards SC with	Arnold Dallas & McPherson
Mr M T Schulze
For the Defendant	Mr J L Parrish SC with	Hall & Wilcox
Ms S Manova
HIS HONOUR:

1          In the course of his employment with the defendant on or about 7 August 2005, Francis Michael Kelly (“the worker”) suffered injury to his right hip, right shoulder, right leg and thoracic spine (“the incident”).

2          On 16 November 2007, the worker made a claim for compensation pursuant to s.98C/98E of the Accident Compensation Act 1985 (“the Act”) arising out of the incident.

3          In early 2008, the worker’s solicitors received advice that their client had contracted incurable lung cancer. He was expected to live approximately seven months.

4 By letter dated 21 February 2008, the WorkCover insurer assessed the worker as having a thirty three per cent Whole Person Impairment in accordance with the American Medical Association Guides to the Evaluation of Permanent Injury (4th ed.). The worker thus had a deemed serious injury in accordance with s.134AB(15) of the Act.

5          On 29 February 2008, a generally endorsed writ was issued out of this Court seeking damages at common law for injuries sustained in the incident[1] (“the damages proceeding”).

[1] Proceeding number CI-08-00769

6          On 14 March 2008, an Originating Motion was issued out of the Supreme Court[2] (“the Supreme Court proceeding”) seeking leave, pursuant to s.135BA(3) of the Act:

[2]             No. 32 of 2008

(a)	for the worker to proceed nunc pro tunc with the damages proceeding; and
(b)	that the hearing of the damages proceeding be expedited.

7          An order granting leave as sought was made by Williams J on 26 March 2008.

8 Following that order, the damages proceeding was resolved on the basis of payment to the worker of the sum of $65,000 after reduction by any amounts received as required by s.134AB(25). The Release, dated 16 April 2008 (“the Release”) made the following reference to costs:

“The Releasee (the employer) agrees to pay party/party costs of the action on County Court Scale D (such costs to include one application to the Supreme Court on 19 March 2008) subject to the provisions of s.134AB(29).

The Releasee agrees to pay party/party costs of the Supreme Court proceeding on the Supreme Court Scale as agreed between the parties, and to be taxed in default of agreement.”

9          The worker died on 5 October 2008. Probate of his Will was granted to Ms Bernadette Kleintz (“the plaintiff”) as executor of his estate, on 26 November 2008.

10        By Writ issued in this Court on 27 July 2009[3] (“the costs proceeding”), the plaintiff claimed, in addition to costs as provided by the Release, to be entitled to legal costs of $4,000 pursuant to item 4F of the WorkCover Legal Costs Order 2006 (“The Costs Order”) being an Order in Council made pursuant to s.134AG of the Act. That section provides for the Governor in Council, by Orders in Council, to make a legal costs order:

[3]             CI-09-02032

“(a)	specifying the legal costs that may be recovered by a legal practitioner acting on behalf of a worker in respect of any claim, application or proceeding under section 134AB, 135, 135A or 135B; and
. . . .”

11 S.135BA of the Act provides:

“(1)	This section applies if a worker who may have an entitlement to recover damages in accordance with section 134AB or 135A in respect of an injury arising out of or in the course of, or due to the nature of, employment believes that that injury or an unrelated medical condition or injury gives rise to an imminent risk of death.
(2)	If this section applies, the worker may subject to compliance with the requirements of this section bring proceedings in accordance with—
(a) section 134AB without complying with the requirements of subsections (1) to (21) and subsections (27), (28) and (38) of that section; or
. . . .”

12        The Costs Order[4] provides, inter alia:

[4]             Victorian Government Gazette – 12 October 2006 – page 2199-2202

“2	Application
This Order specifies the legal costs that may be recovered on a party and party basis by a legal practitioner acting on behalf of a worker in respect of any claim, application or proceedings under section 134AB of the Accident Compensation Act 1985. This order applies to all applications brought or made on or after the date of the commencement of the order pursuant to section 134AG(12). …
3	Definitions
. . .
“application” means an application in the form referred to in section 134AB(5)(a) of the Act;
. . .
“certificate” means a certificate in writing as set out in section 134AB(16)(a)(ii) of the Act;
“claim” means the proposed claim at common law, in respect of each cause of action which the worker seeks to maintain;
“consent and authority” means the form of consent and authority comprising form D to the Ministerial Directions made pursuant to section 134AF(1) of the Act;
. . .
4	Legal Costs
A Where a worker who has provided a signed and witnessed consent and authority, settles or compromises a claim and recovers damages after making an application and after a section 134AB(12) conference has commenced, and prior to commencing proceedings in accordance with section 134AB(12) of the Act, the worker’s legal practitioner is entitled to recover on a party and party basis the costs of the application and the section 134AB(12) conference as follows:-

(1) legal practitioner’s professional costs, $15,000 (inclusive of Counsel’s fees); or

(2)	if the worker obtains a serious injury certificate after the commencement of an Originating Motion $13,500 (inclusive of Counsel’s fees); or
(3)	if the worker obtains a serious injury certificate for pain and suffering only after the commencement of an Originating Motion $11,475 (inclusive of Counsel’s fees)

(4) for non-medical expert reports, the worker’s legal practitioner is entitled to recover as a disbursement reasonable fees for relevant and necessary reports;

(5) in addition to the costs and fees referred to in paragraphs (1) to (4) and Part C, the worker’s legal practitioner is entitled to recover reasonable interpreters’ fees and travel allowances payable in accordance with the Scale of Costs contained in the County Court Rules.

B

Where a worker, who has not provided a signed and witnessed consent and authority, settles or compromises a claim and recovers damages after making an application and after a section 134AB(12) conference has commenced, and prior to commencing proceedings in accordance with section 134AB(12) of the Act, the worker’s legal practitioner is entitled to recover on a party and party basis the costs of the application and section 134AB(12) conference as follows:-

(1) legal practitioner’s professional costs, $12,000 (inclusive of Counsel’s fees); or

(2)	If the worker obtains a serious injury certificate after the commencement of an Originating Motion $9,600 (inclusive of Counsel’s fees); or
(3)	if the worker obtains a serious injury certificate for pain and suffering only after the commencement of an Originating Motion $8,034 (inclusive of Counsel’s fees);

(4) for non-medical expert reports, the worker’s legal practitioner is entitled to recover as a disbursement reasonable fees for relevant and necessary reports;

(5) in addition to the costs and fees referred to in paragraphs (1) to (4) and Part C, the worker’s legal practitioner is entitled to recover reasonable interpreters’ fees and travel allowances payable in accordance with the Scale of Costs contained in the County Court Rules.

C

In addition to the items referred to at Parts A and B above (respectively), in respect to medical reports and treater’s notes and records relied upon and exchanged on behalf of the worker, the worker’s legal practitioner is entitled to recover as a disbursement the reasonable costs of:

(a)

All treater’s notes and records (excluding medico legal reports). Payment for treater’s notes and records shall be made within a reasonable time of a written request to the legal representative of the Authority or self insurer by the worker or the worker’s legal practitioner at any time after the application is served on the Authority or self insurer and is not dependent on the worker obtaining payment of any damages.

(b)

One medico legal report per specialty relevant to the injury or injuries alleged to be and accepted as or determined to be serious. The Authority or self-insurer may allow the cost of more than one medico legal report per speciality. Payment for medico legal reports shall only be made where a worker settles or compromises a claim and recovers damages after making an application and after a section 134AB(12) conference has commenced, and prior to commencing proceedings in accordance with section 134AB(l2) of

the Act.

D	Where a worker settles or compromises a claim and recovers damages, or obtains judgment and is awarded damages after instituting proceedings under section 134AB(12) of the Act (“the proceeding”) and if section 134AB(28)(b) of the Act applies, the worker’s legal practitioner is entitled to costs on a party and party basis as follows:-
(I) legal practitioner’s professional costs and disbursements of the application and section 134AB(12) conference in accordance with:

(a)	if the worker has provided a signed and witnessed consent and authority, the entitlements set out in Part A and Part C; or
(b)	if the worker has not provided a signed and witnessed consent and authority, the entitlements set out in Part B and Part C;

(2) legal practitioner’s professional costs of the proceeding (including counsel’s fees), calculated in accordance with the Scale of Costs that would in the absence of this Order have applied (but as if the amounts in the scale were reduced by 20 per cent), plus disbursements, but excluding any amount in respect of attendances or disbursements incurred prior to rejection of the statutory counter offer by the Authority or self-insurer or before the expiration of 2l days from receipt of the statutory counter offer, whichever is earlier.

E

In addition to the sums specified in Parts A and B above (as the case may be) where proceedings are instituted by a worker pursuant to section 134AB(16)(b) of the Act, and costs are awarded to the worker, the worker’s legal practitioner shall be entitled to legal practitioner’s professional costs on a party and party basis of the proceeding (including counsel’s fees), calculated in accordance with the Scale of Costs that would in the absence of this Order have applied (but as if the amounts in the scale were reduced by 20 per cent) plus disbursements, but excluding any amount in respect of attendances and disbursements incurred prior to the delivery of the advice by the Authority or self-insurer.

F

Where a worker settles or compromises a claim and recovers damages prior to making an application, the worker’s legal practitioner shall be entitled to costs on a party and party basis as follows:-

(1)	legal practitioner’s professional costs, $4,000 (inclusive of counsel’s fees);
(2)	disbursements in accordance with Part A, paragraphs (4), (5) and Part C.

Footnote

The entitlement and costs and disbursements under this Order replaces any other entitlement of a worker to be awarded legal practitioners’ professional costs and disbursements for or incidental to an application, a section 134AB(12) conference or proceedings commenced in accordance with section 134AB(12) or section 134AB(16) of the Act, and has full force and effect notwithstanding anything to the contrary in the Legal Profession Act 2004, the Supreme Court Act 1986 or the County Court Act 1958 or in any regulation, rules, order or other document made under any of those Acts.

. . . .”

13        The worker’s solicitors are entitled to costs of the damages proceeding and Supreme Court proceeding pursuant to the terms of the Release. The question in issue is whether the solicitors are also entitled to the $4,000 referred to in Item 4F of the Costs Order.

14 Given the worker had a terminal illness, s.135BA had application, and thus he was not required to comply with the provisions of s.134AB(1) to (21) including:

(a)	the requirement to make application to the Authority pursuant to s.134AB(5) with all the required accompanying material;
(b)	the statutory offer and counter offer requirements of s.134AB(12); and
(c)	the requirement if the injury was not accepted by the Authority or self- insurer as a “serious injury” to make application to the Court by Originating Motion pursuant to s.134AB(16)(b).

15        In addition:

(d)	the costs provisions of s.134AB(27) and (28), and
(e)	the definitional provisions of s.134AB(38)

were said by s.135BA not to have application.

16 Items 4A and 4B of the Costs Order provide for costs to the legal practitioner of a worker who recovers damages after making an application under s.134AB(5) and prior to commencing a damages proceeding following the statutory offer process prescribed by s.134AB(12). The extent of costs to which a worker’s solicitors are entitled under items 4A and 4B depend upon the various stages or levels completed as set out in sub-paragraphs (1) to (5). Whether the entitlement to costs lies under item 4A or 4B depends upon whether or not the worker has signed a “Consent and Authority”.[5]

[5]             See form D of the Costs Order

17        Item 4C provides for additional costs to be claimed under items 4A and 4B in respect of medical reports and treating doctors’ notes and records which are exchanged and relied upon.

18        Pursuant to item 4D, a worker’s solicitors are entitled to:

(1)	Costs and disbursements of the application pursuant to s.134AB(5) and statutory conference procedure pursuant to s.134AB(12) as provided in items 4A and 4C or 4B and 4C (depending upon whether a “Consent and Authority” form is signed) and
(2)	Costs and disbursements upon the appropriate County Court Scale (less 20 per cent) if a damages proceeding is issued.

19 Item 4E provides for costs upon Scale (less 20 per cent) if the worker issues an Originating Motion pursuant to s.134AB(16)(b).

20 A worker’s solicitors are entitled to costs under item 4F where a worker settles a damages proceeding prior to making an application pursuant to s.134AB(5).

21        Mr Parrish, on behalf of the defendants, made the following submissions:

(a)	The costs order provides the sole repository for any entitlement to costs and disbursements in any application or proceeding pursuant to s.134AB;
(b)	In the limited circumstances of the application of item 4F, the worker’s solicitor’s entitlement to costs is exhausted and there is no further entitlement to costs and disbursements under any other of the items for A-E;
(c)	All of the worker’s solicitor’s costs and disbursements reasonably incurred were covered by the Release, and there was no further work in respect of which Item 4F could be said to apply;
(d)	The provisions of s.135BA truncates the requirements of s.134AB in that a terminally ill worker does not have to bring an application pursuant to s.134AB(5), nor go through the statutory offer provisions of s.134AB(12). In this case there was no need to bring the application by Originating Motion pursuant to s.134AB(16)(b) as the worker had a deemed serious injury because of the 33 per cent Whole Person Impairment assessment undertaken by the WorkCover insurer;
(e)	Item 4F uses the words “prior to making an application . . . “ rather than the words “without making an application”. The use of those words contemplates the settlement of a damages proceeding before the making of an application pursuant to s.134AB(5), inferring that there could still be the need for such an application to be made. In the present case, however, there was never any need for such an application to be made as the provisions of s.135BA(2)(a) specifically dispensed with various of the requirements of s.134AB, including the requirement to make such an application;[6]
(f)	An example of the application of item 4F may include circumstances in which a worker is involved in an application for statutory benefits pursuant to Division 2 of Part IV of the Act or in a procedure before a medical panel pursuant to Division 3 of Part III of the Act, and the worker resolves his damages proceeding before any application is made pursuant to s.134AB(5).

[6]             See further Acir v Frosster Pty Ltd (Ruling) [2009] VSC 173, at paragraph 8

22 Mr Richards, on behalf of the plaintiff, argued that in addition to the solicitor’s entitlement to party/party costs and disbursements of the Supreme Court proceeding, and the damages proceeding, the worker’s solicitors were entitled to costs provided by item 4F as, in accordance with the clear wording of that item, the worker’s damages proceeding was resolved “prior to making an application . . . “ pursuant to s.134AB(5). He said the words “prior to making an application” ought not be interpreted as submitted by Mr Parrish. If a damages proceeding was resolved prior to making the application pursuant to s.134AB(5), then that resolution dispensed entirely with the need to make the application. The situation was no different when s.135BA applied. The need to bring an application under s.134AB(5) is eliminated providing a worker satisfies s.135BA(3) and (4).

23        When I asked Mr Richards as to the professional work undertaken by the worker’s solicitors, excluding the work covered by the costs to which they were entitled in respect of the damages proceeding and the Supreme Court proceeding, as provided for by the Release, he responded:

(a)	the work undertaken by the worker’s solicitors in establishing the facts surrounding the plaintiff’s ill health prior to the issuing of the Supreme Court proceeding; and
(b)	in part, the provision of costs under item 4F was a set-off against the reduction of 20 per cent in party/party costs enforced upon the worker’s solicitors under items 4D and 4E, and s.134AB(29).

24 The provisions of the Costs Order imposed upon workers’ solicitors are not straightforward, nor simple to interpret. On the one hand, the Costs Order purports to apply to all legal costs in respect of which a solicitor may be entitled for “any claim, application or proceeding under s.134AB”. Yet, the circumstances of the common law proceeding do not neatly fit under any of the categories set forth in items 4A to 4E. It does not fit within item 4A or 4B, as no application under s.134AB(5) was made. Further, it does not fit within item 4D as the resolution of the damages proceeding was not made “after instituting proceedings under s.134AB(12) . . .” as the statutory offer and counter offer process prescribed by that section was not undertaken.

25        In my view, item 4F has no application to the circumstances of the present proceeding. I say this for two reasons.

26 Firstly, the interpretation placed upon the words “prior to making an application” in item 4F by Mr Parrish is, in my view, correct. The provisions of s.135BA(2) dispense entirely with the need to comply with the various cumbersome requirements of s.134AB(1) to (21). That is obviously to expedite the procedures of s.134AB so as to enable a terminally ill worker to gain access to damages. Given that dispensation, the need to make an application pursuant to s.134AB(5) is entirely unnecessary. Had item 4F contemplated application in circumstances of a terminally ill worker, then I would have expected that item to make some reference to s.134BA, or the use of words such as “without the need to make an application”. In my view, item 4F was not intended to apply to circumstances such as the present.

27        Secondly, I am not satisfied that there is any aspect of the professional tasks undertaken by the worker’s solicitors which could be said to warrant an award of $4,000 as provided in that item. Such an award could not be said to be a set-off for the 20 per cent reduction in Scale imposed upon the worker’s solicitors. It is inconceivable that the legislation would on the one hand, impose a reduction of 20 per cent in costs, and then on the other hand, provide for a set-off of such reduction in another section. Further, there is no provision either in the Costs Order or in the Act to that effect. I am further not satisfied that the professional undertakings of the worker’s solicitors in work related to assessment of the worker’s illness, and whether or not it was terminal, was work contemplated by item 4F. Such costs, in my view, would be allowable as instructions in the Scale of Costs relating to the Supreme Court proceeding.

28 I am uncertain as to the precise circumstances in respect of which item 4F could be said to apply. Possibly, as submitted by Mr Parrish, it could relate to the resolution of a common law damages claim in the course of some application outside s.134AB.

29        In these circumstances, the worker’s proceeding fails.

30        I shall hear from the parties further in relation to costs.

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