Patricia Orellana-Fuentes v Standard Knitting Mills Pty Ltd
[2002] NSWWCCPD 8
•2 December 2002
REFERRAL OF A QUESTION OF LAW
CITATION:Patricia Orellana-Fuentes v Standard Knitting Mills Pty Ltd [2002] NSWWCCPD 8
APPLICANT: Patricia Orellana-Fuentes
RESPONDENT: Standard Knitting Mills Pty Ltd
INTERVENER: WorkCover NSW
INSURER:CGU Workers Compensation
FILE NO:WCC 53-2002
DATE OF DECISION: 2 December 2002
PRESIDENTIAL MEMBER: Justice Terry Sheahan
President
QUESTION OF LAW: Whether item 4.11 in Schedule 1 of the Workers Compensation (General) Amendments (Costs) Regulation 2001 is contra or ultra vires section 356 of the Workplace Injury Management and Workers Compensation Act 1998?
HEARING:29 October 2002
REPRESENTATION: Applicant: Mr R Goodridge with Mr W Carney of Counsel, instructed by H K Husseini & Co, Solicitors
Respondent: Mr P Macken, Solicitor, Leigh Virtue & Associates
Intervener: Mr S Lloyd of Counsel, instructed by WorkCover NSW
ORDERS MADE: Leave granted 28 August 2002. Item 4.11 of Schedule 6 of the Workers Compensation (General) Regulation 1995 found to be a valid regulation made pursuant to the authority granted by section 337 of the Workplace Injury Management and Workers Compensation Act 1998 Act.
THE QUESTION OF LAW
On 28 August 2002 I granted leave for a question of law in this matter to be referred to me as President of the Workers Compensation Commission (“the Commission”). Section 351 of the Workplace Injury Management and Workers Compensation Act 1998 (“the 1998 Act”) provides for ‘Reference of Question of Law on Compensation Claim to Commission constituted by Presidential Member’. The Commission, constituted by the President, is not to grant leave to a party for referral of a question of law unless satisfied that the question involves a novel or complex question of law.
Patricia Orellana-Fuentes through her legal representative (“the Applicant”) framed the question in her ‘Application for Leave to Refer a Question of Law’ (“the Application”) as follows [without corrections]:
“This is an appeal on a point of law involving s351 and s356 of the Work Place Management Act (1998) NSW as ammended (WIM) and Sch 1, item 4.11 of the Worker’s Compensation ( General) Amendments (Costs) Regulation 2001 ( the costs regulations).
s351 allows an appeal through the Arbitrator on a point of law. The Applicant contents that the cost regulation as set out in Sch 1 item 4.11 of the costs regulation is contra or ultra vires s356 of WIM as it in effect precludes legal representation at an Arbitration Hearing.”
Standard Knitting Mills Pty Ltd and CGU Workers Compensation Insurance (“the Respondent”), through their legal representative, filed a Reply to the leave Application and provided submissions supporting and elaborating on the Application. The Respondent expanded the Applicant’s question of law to encompass the following further issue; involving the validity of the relevant legislation itself:
“The amending legislation may itself be ultra vires by reason of it being inconsistent with the constitution on, for example, one or more of the following grounds:-
a)The legislation appears to reduce or exclude procedural rights in a way that offends Chapter 3 of the Constitution.
b)The legislation may be in breach of a constitutionally implied equality of Australian citizens.
c)The Legislation may offend the right (such as it is) to representation by competent Counsel.”
Under section 106 of the 1998 Act the WorkCover Authority has a right to be heard in “any proceedings before the Commission”. On 15 July 2002 the Registrar of the Commission, at my direction, brought the Application and Reply to the attention of the WorkCover Authority (“the Authority”). The Authority provided written submissions with respect to both the granting of leave and the substance of the question to be referred, and further supplementary written submissions on the constitutional points raised by the Respondent.
The Authority framed the question involved in the Application in the following terms:
“is item 4.11 of the table set out in Schedule 1 of the Regulations is (sic) invalid as being inconsistent with s 356 of the Act?”
At the hearing of the matter on 29 October 2002 Mr Goodridge of Counsel appeared for the Applicant, and presented further written as well as oral submissions on her behalf, and the Respondent and the Authority made oral submissions to supplement those written submissions they had filed.
At the hearing Mr Macken for the Respondent submitted that: “The question is whether or not the regulation is inconsistent with the Act and if it is what the consequence is.” The Respondent did not press the constitutional issues noted in par 3 above, Mr Macken stating: “Beyond having raised the matters for the purpose of preservation, I don’t press them otherwise and I don’t therefore ask the Commission to deal with them, other than to note that they have been raised” (T2, LL17-21).
At the hearing, Mr Goodridge put the “primary question” in these terms:
“Whether any cost regulation which does not, or by its effect does not, permit or entitle a party to proceedings in the Commission to legal representation is a valid regulation or is to be construed so as to prevent in effect representation by a legal practitioner.”
The Applicant and Respondent jointly submitted a document entitled “Statement of Agreed Facts”, in the following terms:
“1. Schedule 6 of Part 23 of the Workers Compensation (General) Regulation asserts as reasonable legal costs calculated at $250.00 per hour.
2.The Schedule precludes legal representation where an Arbitration hearing is required involving attendance and participation in excess of one hour.
3.The parties were precluded (in part) from legal representation in the present proceedings by reason of the said Schedule.”
THE PROVISIONS INVOLVED
Before I summarize the arguments presented by the parties I should set out the relevant provisions of both the 1998 Act and Workers Compensation (General) Regulation 1995 (“the Regulation”) involved in the question.
Section 337 of the 1998 Act provides:
“337 Maximum lawyer and agent costs
(1)The regulations may make provision for or with respect to the following:
(a)fixing maximum costs for legal services or agent services provided to a claimant, an employer or an insurer in or in connection with any workers compensation matter or work injury damages matter,
(b)fixing maximum costs for matters that are not legal services or agent services but are related to a claim for compensation or work injury damages (for example, expenses for witnesses or medical reports).
(2)Regulations under this section can fix costs and amounts by reference to costs and amounts fixed by regulations under the Legal Profession Act 1987.
(3)A legal practitioner is not entitled to be paid or recover for a legal service or other matter an amount that exceeds any maximum costs fixed for the service or matter by the regulations under this section.
(4)An agent is not entitled to be paid or recover for an agent service or other matter an amount that exceeds any maximum costs fixed for the service or matter by the regulations under this section.
(5)This section does not entitle a legal practitioner to recover costs for a legal service or matter that a court or costs assessor determines were unreasonably incurred.
(6)The power under this section to make regulations fixing maximum costs for services or matters includes power to make regulations to provide that no amount is recoverable for a particular service or matter or class of services or matters, with the result that a legal practitioner or agent is not entitled to be paid or recover any amount for the service or matter concerned.”
Section 341 of the 1998 Act provides:
“341 Costs to be determined by Commission
(1)Costs to which this Division applies are in the discretion of the Commission.
(2)The Commission has full power to determine by whom, to whom and to what extent costs are to be paid.
(3)The Commission may order costs to be assessed on the basis set out in Division 6 of Part 11 of the Legal Profession Act 1987 (or in relevant regulations under Division 4 of this Part) or on an indemnity basis.
(4)The Commission may not order the payment of costs by a claimant unless the Commission is satisfied that the claim was frivolous or vexatious, fraudulent or made without proper justification.
Note. A claimant can be ordered to pay the costs of an unsuccessful appeal. See section 345.
(5)If the Commission is satisfied that a part only of a claim was frivolous or vexatious, fraudulent or made without proper justification, the Commission may order the claimant to pay the costs relating to that part of the claim.
(6)Any party to a claim may apply to the Commission for an award of costs.”
Section 343 of the 1998 Act provides:
“343 Restrictions on recovery of practitioner/client costs
(1)The legal representative or agent of a person in respect of a claim made or to be made by the person:
(a)is not entitled to recover from the person any costs in respect of the claim unless those costs are awarded by the Commission, and
(b)is not entitled to claim a lien in respect of those costs on, or deduct those costs from, the sum awarded, ordered or agreed as compensation unless those costs are awarded by the Commission.
(2)Any such award of costs may be made on the application either of the person or of the legal representative or agent concerned.
(3)This section prevails to the extent of any inconsistency with Part 11 of the Legal Profession Act 1987.
(4) A person must not:
(a)claim a lien that the person is not entitled to claim because of this section, or
(b)deduct costs from a sum awarded, ordered or agreed as compensation that the person is not entitled to deduct because of this section.
Maximum penalty: 50 penalty units.
(5)A person who has paid an amount in respect of costs to another person that the other person was not entitled to recover because of this section is entitled to recover the amount paid as a debt in a court of competent jurisdiction.”
Section 347 of the 1998 Act provides:
“347 Regulations for costs assessment
(1) The regulations may make provision for or with respect to:
(a)the assessment or taxation of costs payable to a legal practitioner or agent in connection with a claim for compensation or work injury damages, and
(b)matters associated with the assessment or taxation of those costs.
(2)In particular, the regulations may make provision for or with respect to any matter for or in connection with which provision is made by Division 6 (Assessment of costs) of Part 11 of the Legal Profession Act 1987.
(3)Regulations for the purposes of this Division may adopt, with or without modification, any of the provisions of Division 6 (Assessment of costs) of Part 11 of the Legal Profession Act 1987.
(4)Without limiting this section, the regulations may make provision for or with respect to the assessment of costs by the Commission.
(5)The regulations may make such modifications to the provisions of Part 11 of the Legal Profession Act 1987 as may be consequential on the assessment or taxation of costs payable to a legal practitioner being provided for by the regulations under this Division rather than under Division 6 of Part 11 of that Act.”
Section 356 of the 1998 Act provides:
“356 Representation before Commission
(1)A person who is a party to proceedings before the Commission is entitled to be represented by a legal practitioner or by an agent.
(2)The Commission may refuse to permit a party to be represented by an agent if of the opinion that the agent does not have sufficient authority to make binding decisions on behalf of the party.
(3)In proceedings in respect of a claim, the Commission may refuse to permit an insurer to be represented by a legal practitioner if the claimant is not represented by a legal practitioner.
(4)A party to proceedings before the Commission is entitled to such representation or assistance (for example, the assistance of an interpreter) as may be necessary to enable the party to communicate adequately at any conference or hearing.
(5)The Commission must take into account any written submission prepared by a legal practitioner acting for a party to proceedings and submitted by or on behalf of the party (whether or not the party is represented by a legal practitioner at any conference or hearing in the proceedings).
(6) In this section, agent means:
(a)an officer of an industrial organisation of employers or employees registered under the Industrial Relations Act 1996, or
(b)an officer of an association of employers or employees registered under the Workplace Relations Act 1996 of the Commonwealth, or
(c)a person employed by a licensed insurer or former licensed insurer or by a self‑insurer, or
(d)a person employed by a solicitor, solicitor corporation or incorporated legal practice.”
Clause 107 of the Regulation provides:
“107 Application of Division
This Division is made under section 337 of the 1998 Act and applies to the following costs payable on a party and party basis, on a practitioner or agent and client basis or on any other basis:(a) costs for legal services or agent services provided in or in relation to a claim for compensation, and
(b) costs for matters that are not legal or agent services but are related to a claim for compensation.
Note. Section 337 (3) and (4) of the 1998 Act provide that a legal practitioner or an agent is not entitled to be paid or recover for a legal service or agent service or other matter an amount that exceeds any maximum costs fixed for the service or matter by regulations under section 337.”
Clause 108 of the Regulation provides:
“108 Fixing of maximum costs recoverable by legal practitioners and agents
(1)The costs that are recoverable, and the maximum costs that are recoverable, for:
(a)legal services or agent services provided in or in relation to a claim for compensation, and
(b) matters that are not legal or agent services but are related to a claim for compensation, are the costs set out in Schedule 6, except as otherwise provided by this Part.
Note. The effect of this clause is that a legal practitioner or agent cannot recover any costs in relation to a claim for compensation unless those costs are set out in Schedule 6, except as otherwise provided in this Part.
…”
Schedule 6 of Part 23 of the Regulation provides:
“1Costs determined by reference to activities or events in connection with the matter
(1) In this Schedule:
the table means the Compensation Costs Table at the end of this Schedule.
(2)The maximum costs for an activity or event described in a Part of the table and carried out in or in relation to a claim made or to be made in respect of a particular injury are as follows:
…
Referral of dispute to determination of the dispute
(e) For an activity or event carried out on behalf of a claimant or insurer from the time of referral of a dispute to the Commission to determination of the dispute by the Commission constituted by an Arbitrator—the cost set out in Column 3 of Part 4 of the table opposite that activity or event up to the maximum total costs for that type of activity or event set out in Column 4 of the table.
…
Compensation Costs Table Column 1 Column 2 Column 3 Column 4 Item No Activity or event Maximum Maximum total amount for for type of individual activity/event activity/event … Part 4 Referral of dispute to determination of the dispute … 4.11 Attending and participating $250 $250 in an arbitration hearing (other than where Item 4.10 applies, and subject in the Case of a claim for compensation under section 66 or 67 of the 1987 Act to any Rules of the Commission relating to offers of compromise or settlement) …”
THE SUBMISSIONS SUMMARISED
The Applicant:
In its submissions accompanying the Application, the Applicant submitted that item 4.11 of the Regulation is contra or ultra vires section 356 of the 1998 Act because its effect:
“is to deprive parties who bring applications before the Commission of legal representation at a hearing as it fails even on the [Commission‘s] own standards of remuneration to properly compensate any legal representation at a hearing the provision is therefore contrary to s356 as it in effect precludes legal representation of a party to a hearing of a claim in the Commission.”
The Applicant’s written submissions at the hearing presented six grounds of challenge under the following headings:
1. Enabling provision and construction generally
The Applicant submitted: “the court allows or approves of regulations which complement the Act however the regulations must not supplement the Act” citing dicta in Shanahan v Scott (1957) 96 CLR 245 at 250 and summarised this ground as being: “that the enabling legislation does not permit the hours and time to be limited” (T7,LL54-56).
2. Prohibition rather than regulation
The Applicant cited Blyth District Hospital Inc v South Australian Health Commission (1988) 17 ALD 135 where the South Australian Supreme Court held that a power to regulate fees to be charged for hospital services would not support the fixing of a minimal or nil fee for a service, as its practical effect was to prevent the hospital offering the service concerned. The Applicant submitted that “the courts will recognise and invalidate if the practical effect of the subordinate legislation is a prohibition and not a regulation of the activity” (T8,LL54-56).3. Interference with right to contract
The Applicant cited Attorney General v Metropolitan Meat Industry Board (1917) 18 SR (NSW) 9, where a bylaw was held to be invalid because it was an attempt to interfere with the rights of certain persons to enter into such contractual rights as they thought fit. The Applicant submitted: “…the operation of the regulation on party-party costs operate to control what are the contractual rights of the parties” (T9,LL12-14).4. Proportionality of power
The Applicant cited the judgment of Deane J in Commonwealth v Tasmania (1983) 46 ALR 625, where His Honour (at 810) held that regulations under challenge had to be “capable of being reasonably considered to be appropriate and adapted for giving effect to the convention [that was being invoked as the source of power],” and the comment of the High Court majority in South Australia v Tanner (1989) 83 ALR 631 (at 636): “It must be so lacking in reasonable proportionality as not to be a real exercise of the power.”5. Power to regulate wrongly used to prohibit
On this ground, the Applicant submitted: ” There appears to be no power in the rules to allow a discretion for the prohibiting regulation to be the subject of approval.”6. Repugnancy and ultra vires.
The Applicant submitted that: “the regulations are directly contradictory to the Act,” (T9,LL56-57) and, citing Morton v The Union Steamship Company of New Zealand Limited (1951) 83 CLR 402, that where delegated legislation has an effect inconsistent with the parent act, then the delegated legislation “is found to be repugnant to the Act on which it’s made” (T10,LL12-15).
The Applicant described the sixth ground as the most important from her point of view, and cited Lord Devlin’s remarks in Chandler v The Director of Public Prosecutions (1964) AC 763 (at 810): “The courts will not review the proper exercise of discretionary power but they will intervene to correct excess or abuse.”
The Respondent:
In its written submissions, the Respondent acknowledged that the right to representation is constrained by sections 356(2) and 356(3) of the 1998 Act. The Respondent also submitted that: as “the effect of the Regulation is to preclude a party from representation by a legal practitioner” the Regulation “on its face is clearly inconsistent with the Act and in particular with s356(1) of [the 1998 Act]. “
At the hearing, the Respondent adopted the written and oral submissions of the Applicant, and made additional submissions that:
(a)the question should not be confined to only one part of the costs regulation, and
(b)that the Regulation fixes maximum costs, but cannot fix maximum services.
The Respondent submitted that Column 4 of Schedule 6 of the Regulation goes beyond fixing maximum costs for legal services, as it “purports to regulate the maximum services themselves” (T18,LL10-11).
The Respondent contended that what section 356 of the 1998 Act guaranteed was not reasonable remuneration, but that representational services would be provided.
The Authority:
In its written submissions, the Authority submitted:
“Subsection 337(6) … reveals that regulations may determine that no amount is to be recoverable for particular kinds of service. Given this express indication by Parliament, it is impossible to construe s356 as an implied guarantee that legal representatives will be paid a reasonable amount for their services in connection with workers compensation matters.”
The Authority submitted that as section 356 does not deal with the question of paying legal representatives, and subsection 356(4) is not directed to legal representation, but is designed to ensure that all parties are able to communicate adequately at any conference or hearing, that provision should be characterised as being directed primarily towards language difficulties, but might extend to other problems affecting a person’s ability to communicate (such as a disability).
The Authority further submitted: “If a regulation could provide that no amount is recoverable for a particular kind of service (or range of services) as expressly permitted by s337(6), it is not possible to construe s356 as guaranteeing reasonable remuneration for services provided.” That is, as subsection 337(6) provides that regulations may determine that no amount is to be recoverable for particular kinds of service, Parliament must have had in mind that “regulations could be made which would make utterly unviable the provision of certain kinds of legal services”(T26,LL17-20).
The Authority also submitted that the specificity of section 337(6) should prevail over any inference from the general provisions contained in section 356 to the extent that there is any inconsistency between them.
DISCUSSION
In Solomons v District Court of New South Wales [2002] HCA 47 Kirby J stated (at [98]) that: “… it is increasingly accepted that the proper approach to statutory construction is, so far as the language of the text (and constitutional warrant) permits, to give effect to the purpose expressed in the legislation.” See also Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at (381-382).
The words of a statute are to be read in their context. In K & S Lake City Freighters Pty Ltd v Gordon & Gotch Ltd (1985) 60 ALR 509 (at 514) Mason J said:
“Problems of legal interpretation are not solved satisfactorily by ritual incantations which emphasize the clarity of meaning which words have when viewed in isolation, divorced from their context. The modern approach to interpretation insists that the context be considered in the first instance, especially in the case of general words, and not merely at some later stage when ambiguity might be thought to arise.”
See again Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 (at 381-2).
Section 356 of the 1998 Act provides a right of legal representation to parties participating in matters before the Commission, and severely limits the Commission’s power to exclude a person’s chosen representative, but it does not guarantee unlimited free legal representation.
In Minister for Resources v Dover Fisheries Pty Ltd (1993) 116 ALR 54 (at 63), Gummow J, referring to Lord Reid in AMP Inc v Utilux Pty Ltd [1972] RPC 103, said that where there are two provisions in a single piece of legislation which initially appear to be in conflict, it “… being improbable that the framers of legislation could have intended to insert a provision which has virtually no practical effect, one should look to see whether any other meaning produces a more reasonable result.”
Counsel for the Applicant submitted: “the regulations can fill in outlined and sketched provisions but cannot supplement them,” (T6,LL48-49) and the Commission takes the view that is precisely what the regulations do in this matter.
Clause 107 of the Regulation states clearly that the costs provisions in compensation matters are made pursuant to section 337 of the 1998 Act, and not section 347 as the Applicant submitted.
Section 337 of the 1998 Act does not directly seek to limit legal representation. Subsection 337(6) provides for the making of regulations that fix maximum costs for legal services provided in connection with any workers compensation matter. There is no provision or principle that demands that such maximum costs cannot be a “nil” or “zero,” and s337 specifically envisages that situation. So far as the Respondent can be said to argue that the Regulation is invalid because the maximum is “inadequate”, such an argument clearly must fail.
Section 337 clearly evinces an intention to the contrary on the part of the Parliament, in that Regulations can be made to control for what services legal practitioners can and cannot recover costs, as well as how much they can recover for a particular service. Section 337 specifically uses the word ‘services’.
The question for this Commission is not the setting of prices for services, but whether the regulations under which the prices are set are valid. The Commission has a wide power under section 341 of the 1998 Act to make orders regarding costs, but only within such regulations. Parliament has chosen to enable costs to be limited and Parliament can monitor the effects of the law. As the Applicant submitted “[t]he practice of law in this state is and remains one of private business” (T11,LL45-46), and it will be up to the individual practitioner to decide whether to practise in the field as its remuneration is delineated by valid legislation and regulations.
As Section 343(1)(a) of the 1998 Act clearly provides a direct statutory restriction on the right to contract, the Applicant’s third ground clearly fails.
The Commission finds no ambiguity in section 337, its associated provisions, or their content, and takes the Act to mean and enable what it clearly says. That being so, none of the Applicant’s remaining five grounds of challenge can succeed. The regulation made pursuant to its provisions complements the section and carries out its purpose in a proportional way.
DECISION
For the reasons I have given, I find, in answer to the question of law referred to me, that item 4.11 of Schedule 6 of the Workers Compensation (General) Regulation 1995 is a valid regulation made pursuant to the authority granted by section 337 of the Workplace Injury Management and Workers Compensation Act 1998.
COSTS
Despite being given the opportunity to do so, no party made any submissions with respect to the costs of this matter (T32,LL15-41), and I, therefore, make no order as to costs.
Justice Terry Sheahan
President
I certify that this is a true and accurate record of the reasons for decision of Justice Terry Sheahan, President, Workers Compensation Commission
Registrar
Date: 2 December 2002
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