Peter Nicholas Moloney Trading as Moloney & Partners v The Workers Compensation Tribunal
[2010] SASCFC 17
•2 August 2010
SUPREME COURT OF SOUTH AUSTRALIA
(Full Court)
PETER NICHOLAS MOLONEY TRADING AS MOLONEY & PARTNERS v THE WORKERS COMPENSATION TRIBUNAL
[2010] SASCFC 17
Judgment of The Full Court
(The Honourable Chief Justice Doyle, The Honourable Justice Anderson and The Honourable Justice Layton)
2 August 2010
STATUTES - SUBORDINATE LEGISLATION - VALIDITY - ULTRA VIRES GENERALLY - RELEVANT PRINCIPLES - GENERALLY
WORKERS' COMPENSATION - MISCELLANEOUS MATTERS
Whether r 31(2) of the Workers Compensation Tribunal Rules 2009 is invalid - whether power conferred by s 88E(1)(f) of the Workers Rehabilitation Compensation Act 1986 (SA) is limited by s 88G - what power is conferred by s 88G - effect of s 88G on s 88E(1)(f) - whether s 88G has effect of invalidating r 31(2) - meaning and operation of r 31(2) - power conferred by s 88G(1) not exercised - r 31(2) valid - proceedings dismissed.
Federal Court of Australia Act 1976 (Cth) s 59; Legal Practitioners Act 1981 (SA) s 41, s 42; Workmen's Compensation Act 1932 (SA) (ceased) s 58, s 111; Workmen's Compensation Act 1900 (SA) (ceased) cl 10 sch 2, cl 12 sch 2; Workmen's Compensation Act 1971 (SA) (ceased) s 41, s 41(b)(1b), s 41(3), s 130; Workers Rehabilitation and Compensation Act 1986 (SA) s 2(1), s 82, s 88E, s 88E(1), s 88E(1)(c), s 88E(1)(f), s 88E(1)(g), s 88E(2), s 88F, s 88G, s 88G(1), s 88G(2), s 92, s 92(2)(b)(ii), s 92(3), s 92a, s 92a(4), s 92a(5), s 92a(5a), s 92a(5b), s 92a(6), s 95, s 95A, s 123A; Workmen's Compensation Act Amendment Act 1973 (SA); Workers Rehabilitation and Compensation Amendment Act 1988 (SA); Workers Rehabilitation and Compensation (Dispute Resolution) Amendment Act 1995 (SA); Workers Rehabilitation and Compensation (Miscellaneous Provisions) Amendment Act 1991 (SA); Workers Rehabilitation and Compensation (Review Authorities) Amendment Act 1993 (SA); Workers Rehabilitation and Compensation (Scheme Review) Amendment Act 2008 (SA); Supreme Court Rules 2006 (SA) r 199(2)(b); Workers Compensation Tribunal Rules 2009 (SA) r 31(1), r 31(2); Workers Rehabilitation and Compensation (Dispute Resolution) Regulations 1996 (SA) r 7, referred to.
Cachia v Hanes (1994) 179 CLR 403; Elders Trustee and Executor Company Limited v Estate of Herbert (1996) 111 NTR 25; Garnett v Bradley (1878) 3 AC 944; Jacobs v OneSteel Manufacturing Pty Ltd and WorkCover Corporation of SA (2006) 93 SASR 568; McGraw-Hinds (Aust) Pty Ltd v Smith (1979) 144 CLR 633; Scammell & Co v WorkCover Corporation (2006) 95 SASR 278; Keith Hercules & Sons v Steedman (1987) 17 FCR 290, considered.
PETER NICHOLAS MOLONEY TRADING AS MOLONEY & PARTNERS v THE WORKERS COMPENSATION TRIBUNAL
[2010] SASCFC 17Full Court: Doyle CJ, Anderson and Layton JJ
DOYLE CJ: I agree with Layton J that the Court should refuse to make a declaration that r 31(2) of the Workers Compensation Tribunal Rules 2009 (SA) (the Rules) is invalid.
As I reach that conclusion by a different route from that taken by Layton J, I will state my reasons briefly. I do so briefly because there is some overlap between our reasons. It is unnecessary for me to set out the relevant legislation and the relevant provision of the Rules. They are to be found in the reasons of Layton J.
A power of the kind conferred by s 88E of the Workers Rehabilitation and Compensation Act 1986 (SA) (the Act) should be read liberally. Such a power is intended to give the President of the Tribunal ample power to regulate the practice and procedure of the Tribunal, and related matters. There is certainly no reason to read the powers conferred by s 88E narrowly.
But for the presence of s 88G, one would ordinarily read s 88E(1)(f) as conferring a power to make rules relating to the costs of proceedings in the Tribunal, including rules relating to the costs as between parties to proceedings in the Tribunal and costs between a party and the party’s representative in those proceedings. There is no reason why the reference to “costs” should not be read as embracing each of those well known aspects of costs in the context of legal proceedings: Elders Trustee and Executor Company Limited v Estate of Herbert (1996) 111 NTR 25 at 30.
Courts and Tribunals are often given power to make orders as to costs, and to make rules regulating costs. While each such provision must be considered in its context, in my opinion the starting point is that the term “costs” is apt to embrace both costs as between parties to proceedings and costs as between one party to those proceedings and that party’s representative.
To so decide is not to decide that there are no limits to the scope of s 88E(1)(f), arising from other provisions of the Act. For example, s 95(1) of the Act identifies a situation in which a party to proceedings is entitled to costs subject to certain qualifications: s 95(2). Section 95(5) fixes a limit to the costs recoverable under s 95, a limit that must be observed in any rule made under s 88E(1)(f). See Jacobs v OneSteel Manufacturing Pty Ltd and WorkCover Corporation of SA [2006] SASC 32; (2006) 93 SASR 568 at [105]-[110]. Again, s 95A is another example of a specific provision relating to costs that will limit the scope of the general power conferred by s 88E(1)(f).
The issue in the present case is whether the power that would otherwise be conferred by s 88E(1)(f) is limited, either in its scope or in its exercise, by the power conferred by s 88G. If a limit on the general power under s 88E(1)(f) is to be found in the provisions of s 88G, the extent of that limit must be identified.
What power does s 88G of the Act confer? It confers a power on the Governor in Executive Council. It confers a power to make a regulation fixing a scale of costs. The costs must relate to work done by a representative of a party, or work associated with that work. The scale of costs must be in a form that will enable the Tribunal to identify the maximum amount recoverable by a representative of a party to proceedings from that party. That scale could take a variety of forms. But it must enable the maximum amount recoverable to be identified, because s 88G creates an offence which will be committed if a claim is made for more than the amount allowable under the scale.
The power conferred by s 88G(1) of the Act is not a power to regulate in general terms the mutual and respective rights and entitlements of a party to proceedings and the representative of that party.
There is no inconsistency (in a general sense) or direct conflict between a power to make rules relating to and regulating a claim by a representative for the costs of representation against the party represented, and a power to specify a maximum amount recoverable by a representative as a result of such a claim. The two powers can sit together. Various aspects of a claim by a representative against a party for the costs of representation will need to be dealt with, and are apt to be dealt with under s 88E(1)(f). For example, it might be appropriate to provide that such a claim, if it is to be made, must be made within a certain period after the completion of proceedings. Rules might be made governing the procedure for a representative making a claim for costs, and dealing with how that claim is to be adjudicated.
There is no good reason to read s 88G of the Act as depriving the President of the power to make rules that relate to the topic of a claim by a representative of a party for costs against that party. Section 88G does not have that effect, although it does not follow that it has no effect on the power conferred by s 88E(1)(f).
Does s 88G have the effect of invalidating r 31(2)?
What does r 31(2) of the Rules do? It establishes a procedure by which a representative who wishes to claim costs from a worker (over and above those payable by the compensating authority) can make that claim and have it adjudicated. It is to be understood in the context of s 95(1) of the Act, the effect of which is to provide that the representative will recover from the party only an amount equal to the costs payable by the compensating authority, unless an award is obtained under r 31(2). Rule 31(2) does not limit the amount recoverable by the representative. Rule 31(1) (the validity of which is not challenged) sets a presumptive limit (costs according to the Supreme Court scale) but even that limit can be exceeded in “exceptional circumstances”.
If a regulation were to be made under s 88G, the scale made by regulation would limit the amount recoverable under r 31(2), but that limit is found in r 31(1), not in r 31(2). That scale might render the presumptive limit under r 31(1) irrelevant, because the scale fixed by regulation might not allow recovery of an amount equal to the Supreme Court scale.
But this does no more than illustrate how these provisions might interact.
In my opinion there is no inconsistency between a power to fix a maximum amount recoverable by a representative of a party (s 88G) and a rule establishing a procedure for the making of a claim for costs by a representative of a party (r 31(2) of the Rules).
As I have already said, in my opinion there is no inconsistency or clash between a power to make rules regulating costs as between a party to proceedings and the party’s representative, and a power to fix a maximum amount recoverable by a representative of a party. The exercise of the latter power may limit what can be done under the former power, but will do no more than that. As the power conferred by s 88G(1) of the Act has not been exercised, the impact of the exercise of such power does not arise. I should add that it may be that in light of s 88G(1) the power conferred by s 88E(1)(f) does not extend to a power to make a rule that specifies a maximum amount recoverable by a representative of a party, but r 31(2) does not do that. Nor does r 31(1). It fixes a presumptive limit only.
I do not agree that the power conferred by s 88E(1)(f) does not authorise the making of rules that limit the entitlement of a solicitor to exercise contractual rights to remuneration, and claim remedies in support of those rights, such as a lien. In my opinion this kind of thing is an aspect of a power to regulate costs.
For those reasons I conclude that the attack on the validity of r 31(2) fails. I would dismiss the proceedings.
ANDERSON J: I agree that the proceedings should be dismissed. I agree with the reasons of Doyle CJ.
LAYTON J: The plaintiff sought an order pursuant to Rule 199(2)(b) of the Supreme Court Rules 2006 (SA) seeking a declaration that Rule 31(2) of the Workers Compensation Tribunal Rules 2009 (SA) (“the Rules”) is invalid. The plaintiff submitted that the rule was ultra vires s 88E(1)(f) of the Workers Rehabilitation and Compensation Act 1986 (SA) (“the Act”) and, in the alternative, sought a declaration that the Rule was ultra vires and unreasonable.
At the hearing, the Full Court was informed that the defendant, the Workers Compensation Tribunal, would not be represented and would abide the event. The Court heard submissions from counsel on behalf of the plaintiff as well as counsel for the Attorney General and counsel for the WorkCover Corporation of South Australia (intervening pursuant to s 123A of the Act).
The legislation and rules
The primary legislative provision and rules relevant to the appeal are set out hereafter.[1] These provisions have all been in operation from at least 2 February 2009 to date, although they commenced at different times.
[1] South Australia Workers Compensation Tribunal Rules 2009, Rule 31 - representation costs.
Sections 88E, 88F, 88G and 95 and 95A of the Workers Rehabilitation and Compensation Act 1986 (SA) provide:
88E—Rules
(1) The President may make Rules of the Tribunal—
(a)regulating the business of the Tribunal and the duties of the various officers of the Tribunal; and
(b)authorising conciliation officers to exercise any part of the jurisdiction of the Tribunal; and
(c)regulating the practice and procedure of the Tribunal; and
(d)imposing mutual obligations on parties to proceedings in the Tribunal to disclose to each other the contents of expert reports or other material of relevance to the proceedings before the proceedings are brought to trial; and
(e)regulating the form in which evidence may be taken; and
(f)regulating costs; and
(g)dealing with any other matter necessary or expedient for the effective and efficient operation of the Tribunal.
(2) Before making Rules of the Tribunal, the President must consult with a rules committee consisting of—
(a)at least three presidential members; and
(b)at least two conciliation officers; and
(c)the Registrar.
(3) The rules take effect as from the date of publication in the Gazette or a later date specified in the rules.
88F—Costs of proceedings
Subject to this Act, the costs of proceedings before the Tribunal are in the discretion of the Tribunal.
88G—Recovery of costs of representation
(1) A representative of a party to proceedings before the Tribunal must not charge nor seek to recover for work involved in, or associated with, that representation an amount exceeding the amount allowable under a scale fixed by regulation.
Maximum penalty: $2 000.
(2) Before proposing a regulation under this section to the Executive Council, the Minister must consult with the Crown Solicitor.
…
Division 7—Costs
95—Costs
(1) A party (other than the relevant compensating authority) is entitled, subject to this Part and to limits prescribed by regulation, to an award against the relevant compensating authority for the party's reasonable costs of—
(a)the initial reconsideration of a disputed decision; and
(b)any subsequent proceedings for resolution of the dispute under this Part (but not proceedings by way of an appeal or a reference of a question of law to a Full Bench of the Tribunal or the Supreme Court).
(2) Costs may only be awarded to cover—
(a)the cost of representation by a legal practitioner or an officer or employee of an industrial association; and
(b)costs of a kind authorised by the regulations that were reasonably incurred.
(3) If the Tribunal is of the opinion that a party acted unreasonably, frivolously or vexatiously in bringing or in relation to the conduct of proceedings, the Tribunal may—
(a)decline to make an award of costs in favour of the party and may further (if it thinks fit) make an award of costs against the party; or
(b)reduce the amount of the award to which the party would otherwise have been entitled.
(4) An award of costs to cover professional advice or assistance may, if the Tribunal considers appropriate, be made in favour of the person who provided the professional advice or assistance.
(5) An award of legal costs cannot exceed 85% of the amount that would be allowable under the relevant Supreme Court scale if the proceedings were in the Supreme Court.
95A—Costs liability of representatives
(1) In this section—
professional representative means a legal practitioner or other person who has been engaged or appointed to represent a party to proceedings before the Tribunal (whether personally or through an employee or agent).
(2) If a professional representative acting for a party to proceedings before the Tribunal under this Part (whether personally or through an employee or agent) has caused costs—
(a)to be incurred improperly or without reasonable cause; or
(b)to be wasted by undue delay or negligence or by any other misconduct or default,
the Tribunal may make an order as specified in subsection (3).
(3) The Tribunal may order—
(a)that all or any of the costs between the professional representative and his or her client be disallowed or that the professional representative repay to his or her client the whole or part of any money paid on account of costs;
(b)that the professional representative pay to his or her client all or any of the costs which his or her client has been ordered to pay to any party;
(c)that the professional representative pay all or any of the costs of any party other than his or her client.
Sections 88E, 88F, 88G and 95 were inserted by the Workers Rehabilitation and Compensation (Dispute Resolution) Amendment Act 1995 (SA), No 75 of 1995 and came into operation on 3 June 1996. Section 95A was inserted by the Workers Rehabilitation and Compensation (Scheme Review) Amendment Act 2008 (SA), No 17 of 2008 and came into operation on 1 January 2009.
Rule 31 of the Rules came into force on 2 February 2009. This Rule provides:
(1)A representative of a party shall not charge excessive representation costs. Unless there are exceptional circumstances representation costs greater than the Supreme Court scale as varied from time to time (‘the Supreme Court scale’) shall be regarded as excessive.
(2)A representative acting for a worker in respect of proceedings under the Act is not entitled to recover from that worker any costs in respect of those proceedings in addition to those payable by the compensating authority or claim any lien in respect of such costs or deduct such costs from sum awarded as compensation to the worker unless those additional costs have been awarded by a Presidential Member of the Tribunal. Where a worker’s representative seeks such an award of costs the representative shall file an Application for Directions and a supporting affidavit and serve them upon the worker. The Application shall then be referred to a Presidential Member who shall make such orders or give such directions, as may be appropriate including, for example:
(a) directing the worker’s representative to prepare a short or long form bill of costs;
(b) directing the worker or the worker’s representative to obtain an opinion from of [sic] an independent lawyer regarding the reasonableness of the claim for additional costs and directing who should bear the costs of obtaining that opinion;
(c) directing the worker or the worker’s representative to participate in a conciliation conference to explore the resolution of any issues arising out of the claim for additional costs;
(d) directing the Registrar to conduct a taxation of costs and make recommendations such as what amount of additional costs are reasonable;
(e) directing the worker’s representative to produce all files relating to the worker that are in the representative’s possession, custody or control;
(f) directing that any documents produced in connection with the Application be marked confidential.
(3)A Presidential Member in determining what, if any additional costs should be awarded shall have regard to the conduct of the worker, the amount of money involved, the importance of the case, the complexity of the issues in dispute, and any other relevant matter.
(4)Sub-rules (2) and (3) only apply to matters in respect of which instructions were given on or after 1 January 2009.
Summary of the arguments
The primary argument of the plaintiff was that s 88E(1)(f) of the Act only authorised the President to make rules regulating “costs” inter partes (“party/party costs”) and not costs as between one of the parties and his or her legal representatives (“solicitor/client costs”). It was submitted that the word “costs” in the phrase “regulating costs” in s 88E(1)(f) was intended to have the same meaning as the word “costs” referred to in s 88F, namely “costs of proceedings”, being a reference to party/party costs. It was submitted that this was the ordinary usage in a court or tribunal context.
This interpretation was said to be supported by the following factors:
·the same use of the word “costs” in ss 88F and s 95 of the Act, which were referable to party/party costs;
·section 88G expressly gave power to the Executive Council to make regulations controlling the scale of fees for a “representative” (which would include a solicitor) and that it was inconsistent therefore for the President to have a rule making power with regard to solicitor/client costs;
·the control of solicitor/client costs is dealt with comprehensively in ss 41 and 42 of the Legal Practitioners Act 1981 (SA) in combination with the Supreme Court Rules; and
·in the absence of express words or necessary implication from the legislation, it was not intended that costs in s 88E(1)(f) should interfere with common law rights under retainer contracts between solicitor and client or with a right of recovery by a solicitor of those costs by way of a lien.
The defendant and the intervening party responded to the contrary and between them their arguments in support of their interpretation included:
·the history of workers compensation legislation since 1900 which demonstrated that there have always been limitations on solicitors with regard to the charging and recovery of solicitor/client costs from workers;
·the rule making power is to be interpreted having regard to the fact that the legislation is beneficial and is for the purpose of protecting workers’ rights to compensation and ensuring that they were not eroded inappropriately by liability for costs;
·the word “costs” has historically included not only party/party, but also solicitor/client costs;
·section 88E(1)(f) by its broad expression includes not only party/party costs, but also solicitor/client costs;
·the word “costs” is used in different ways within particular sections of the legislation such as ss 88F, 88G, 95 and 95A of the Act;
·Rule 31(2) is empowered not only by s 88E(1)(f) but also by the provisions of s 88E(1)(c) and (g); and
·Rule 31(2) is not invalid in empowering the President to make rules as to solicitor/client costs simply because the Executive Council has the power to make regulations to fix a scale of costs of representation pursuant to s 88G.
Scheme of workers compensation legislation and history of rule making power
It is well recognised that workers’ compensation legislation is beneficial and remedial, with a principal aim of compensating injured workers.[2] There has been an unbroken historical protection of workers’ compensation payments through workers’ compensation legislation dating from 1900 to the present legislation.[3]
[2] Scammell & Co v WorkCover Corporation (2006) 95 SASR 278, 294 [74], (Layton J (Nyland and Sulan JJ agreeing).
[3] Scammell & Co v WorkCover Corporation (2006) 95 SASR 278, 297-9 [93]-[99], (Layton J (Nyland and Sulan JJ agreeing).
Using the current legislation, namely the Workers Rehabilitation and Compensation Act 1986 (SA) as amended, being the particular legislation in question, the objects of the Act are stated in s 2(1) of the Act and include:
·to establish a worker’s rehabilitation and compensation scheme that provides fair compensation for employment related disabilities;[4]
·to provide for the efficient and effective administration of the scheme;[5]
·to establish incentives to encourage efficiency and discourage abuses;[6] and
·to reduce litigation and adversarial contest to the greatest possible extent.[7]
[4] Workers Rehabilitation and Compensation Act 1986 s 2(1)(a)(iii).
[5] Workers Rehabilitation and Compensation Act 1986 s 2(1)(b).
[6] Workers Rehabilitation and Compensation Act 1986 s 2(1)(c).
[7] Workers Rehabilitation and Compensation Act 1986 s 2(1)(f).
Since 1900 to the present time, there have been many twists and turns in the statutory provisions and the rule making powers with respect to costs, both party/party and solicitor/client. I will therefore set out some of the more important legislative changes during this period, though the survey is not exhaustive.
The starting point is the Workmen’s Compensation Act 1900 (SA). Clause 10 of Schedule 2 of that Act provided the rule making power:
The Governor may make or repeal regulations providing for rules of court, and generally for carrying this Act into effect.
Clause 12 of Schedule 2 provided as follows:
Any sum awarded as compensation shall be paid on the receipt of the person to whom it is payable under any agreement or award, and his solicitor or agent shall not be entitled to recover from him or to claim a lien on or deduct any amount for costs from the said sum awarded for any costs except such as have been awarded in arbitration. On an application made by either party to determine the amount of costs to be paid to the said solicitor or agent, such sum to be awarded subject to taxation and to the scale of costs prescribed by rules of court.
[Emphasis added.]
Clause 12 therefore prevented a solicitor or agent recovering costs from compensation payments, or claiming any lien, unless there was an award in arbitration. The amount of solicitor/client costs was to be assessed by reference to rules of court prescribing those costs. Clause 10 empowered the Governor to make regulations which included the power to make rules of court. The regulating power was expressed in very general terms as being “for carrying this Act into effect” and implicitly the same generality applied to the making of rules of court.
The Workmen’s Compensation Act 1932 (SA) effectively re-enacted clause 12 of schedule 2 of the 1900 Act in s 58. It controlled and limited the entitlement of a solicitor or agent to claim costs, unless determined by an arbitrator or special magistrate. So far as the rule making power was concerned, there were various sections which dealt with rules of court which were more limited than the generally expressed Clause 10 of schedule 2 of the 1900 Act. In addition, s 111 also gave power to the Supreme Court to make rules in respect of appeals or other matters in which the Supreme Court had jurisdiction.
In the Workmen’s Compensation Act 1971 (SA) the rule making power was expressed in s 130. This Act provided for a different regime in that it gave jurisdiction to the Industrial Court of South Australia. Section 130 was expressed in the following terms:
The power to make rules under section 160 of the Industrial Code, 1967, as amended, shall include power to make Rules of Court, notwithstanding that those Rules of Court may be inconsistent with the Industrial Code, 1967, as amended, for any purpose for which this Act authorizes Rules of Court (not being rules of the Supreme Court) to be made and also for generally regulating the practice of the Court, the practice of the Full Industrial Court generally and in relation to appeals and officers of the Court, and for carrying into effect this Act so far as it relates to or affects the Court or officers of the Court and such rules may also prescribe such forms and scales of fees, costs and expenses as may be necessary or convenient for the purposes of this Act.
[Emphasis added.]
This approach differed from the earlier rule making powers in that it not only empowered the Court to make rules “generally regulating the practice of the Court”, but also expressly indicated that the rules may also prescribe “scales of fees, costs and expenses.”
In relation to costs, s 41 of the 1971 Act contained a similar provision to those of the earlier Acts which restricted the right of a solicitor to recover costs or claim a lien over any award of compensation. Subsection 41(3) contained a further express limitation on solicitor/client costs and their recovery by a solicitor, namely:
No agreement by a person claiming compensation to pay any amount by way of costs greater than the amount awarded by the Court shall be binding on that person and any amount paid by that person by way of costs in excess of the amount so awarded shall be recoverable by that person as a debt due to him.
This provision directly prevented a solicitor from being able to recover costs in excess of any amount awarded by the Court, regardless of any retainer agreement. It was a specific inroad on the common law as to solicitor/client costs.
Later, the Workmen’s Compensation Act Amendment Act 1973 (SA) amended s 41, inter alia, by adding a further subsection enabling the court to make an order that a solicitor or a legal practitioner personally pay costs. That subsection, s 41(b)(1b), was expressed in the following terms:
Where it appears to the Court that costs to a party have been improperly or without reasonable cause incurred by reason of the misconduct or default of a legal practitioner the Court may call on the legal practitioner to show cause why those costs should not be paid by the legal practitioner personally or, as the case requires, be repaid by the legal practitioner to the party incurring them and thereupon the Court may make such order as the justice of the case may require.
This section gave further protection for a worker against liability for solicitor costs in a situation of misconduct or default of the solicitor. Then the Workers Rehabilitation and Compensation Act 1986 (SA) was enacted which provided in s 82 for the rule making power. It was simply expressed and reverted back to a manner reminiscent of the general expression in the 1900 Act, namely “[t]he President of the Tribunal may make rules regulating the practice and procedure of the Tribunal.”
There was also a new provision, s 92, in respect of costs:
(2)Where–
(a) a party is represented in proceedings by a legal practitioner or by an officer of a registered association;
and
(b) (i) the proceedings are determined in favour of the party;
or
(ii)although the proceedings are not determined in favour of the party, the review authority certifies that the party acted reasonably in bringing the proceedings before the review authority,
the party is entitled to be reimbursed to an extent prescribed by regulation for the costs of the proceedings.
(3)Where frivolous or vexatious proceedings are brought before a review authority, the authority may order the party by whom the proceedings were brought to pay to any other party such costs as may be fixed by the authority.
(4)Costs payable in pursuance of an order under subsection (3) may be recovered as a debt.
This section took a different approach from previous legislation. In effect it guaranteed reasonable costs to be paid to a solicitor in accordance with regulations even if the party was unsuccessful. This was qualified by the provisions regarding unreasonableness or frivolousness in s 92(2)(b)(ii) and (3).
The Workers Rehabilitation and Compensation Act Amendment Act 1988 (SA) added to the rule making power in s 82 of the 1986 Act. The previous s 82 was redesignated as subsection (1) and was then expanded by subsection (2). The addition concerned rules as to certain court procedures which are not relevant to the rule making provision for costs. There was no change to s 92.
The Workers Rehabilitation and Compensation (Miscellaneous Provisions) Amendment Act 1991 (SA) made no change to the rule making power previously expressed in the 1988 Act. In respect of costs, s 92a was added. This provided an additional regime which entitled a party who was represented by a legal practitioner to obtain the costs of representation from the review authority. Section 92a(4) provided “[w]here costs of representation are awarded, the award may be made, if the review authority thinks fit, in favour of the representative.” Further, s 92a(5) and (6) provided:
(5)Unless otherwise ordered by the review authority, costs awarded under subsection (1)(a) or (b) are payable by the Corporation or an exempt employer (according to whether the Corporation or the exempt employer is the compensating authority).
(6)Costs under this section may be recovered as a debt.
These provisions ensured that the costs would be paid by the compensating authority and not by the worker. There was no restriction against a solicitor being able to claim additional costs by way of a retainer directly from the worker and such costs were not subject to court supervision. This was remedied by the Workers Rehabilitation and Compensation (Review Authorities) Amendment Act 1993 (SA) and s 92a was amended to insert subsections (5a) and (5b):
(5a)The representative of a person in proceedings before a review authority must neither charge nor seek to recover in respect of his or her representation in those proceedings, and any other associated work, an amount by way of costs in excess of the amount allowable under scales published from time to time by the Minister in the Gazette.
(5b)The Minister must consult with the Crown Solicitor before fixing or varying a scale for the purposes of subsection (5a).
Thus, the amount that a solicitor could charge a worker was to be governed by scales published from time to time by the Minister, who was required to consult with the Crown Solicitor before fixing or varying a scale. This was the precursor to the provisions which are now contained in s 95, which was introduced by the Workers Rehabilitation and Compensation (Dispute Resolution) Amendment Act 1995 (SA), and s 95A which was subsequently introduced by the Workers Rehabilitation and Compensation (Scheme Review) Amendment Act 2008 (SA).
In short, this history reveals that there were various methods used to control what would otherwise be the common law right of a solicitor to enter into retainer agreements with a worker and to then recover costs from that worker, including the obtaining of a lien. The methods that have been used have differed, but the intention was clear and the various Hansard Reports indicate the same theme. That of course does not answer whether, in this particular case, Rule 31(2) was a valid exercise of the rule making power provided for in s 88E.
Costs
The authorities and case law indicate that the expression “costs” may be used in two ways. First, in a party/party sense, that is the amount by which one party is directed to pay another party to litigation as either partial or fully indemnity for professional legal fees and expenses incurred by that party in the course of litigation. Secondly, in a solicitor/client sense which is remuneration for work performed by a solicitor pursuant to a retainer agreement or contract.[8] The particular meaning which the word has in a statute is to be derived from the context of the statute which seeks to regulate the awarding of costs or the recovery of costs.[9] Historically the awarding of party/party costs, with the exception of the Court of Chancery and the House of Lords,[10] has been solely a creature of statute,[11] whereas solicitor/client costs have been governed at common law by a retainer agreement for professional services rendered, with recovery on either a fixed basis or quantum meruit. In the case of solicitor/client costs, they have increasingly been the subject of limitations both as to quantum and conditions for recovery as illustrated in the legislation as earlier discussed. More generally, controls include limiting recovery through the setting of scales and judicial monitoring of the quantum of costs through the provision of a bill of costs for taxation.[12] Any preconditions for controlling solicitor/client costs or any limitation as to recovery of those costs must be found in legislation.[13]
[8] Dal Pont, Law of Costs (2nd ed, 2003) [P.4]-[P.6]; Lawbook Co, Quick on Costs, vol 1 (at Update 45) [1.30]; Cachia v Hanes (1994) 179 CLR 403, 409, 410; Elders Trustee and Executor Company Ltd v Estate of Herbert (1996) 111 NTR 25, 30.
[9] McGraw-Hinds (Aust) Pty Ltd v Smith (1979) 144 CLR 633, 643.
[10] Lawbook Co, Quick on Costs, vol 1 (at Update 45) [2.70], [2.100] – [2.110].
[11] Lawbook Co, Quick on Costs, vol 1 (at Update 45) [2.40], [2.60], Garnett v Bradley (1878) 3 AC 944, 953-4.
[12] Dal Pont, Law of Costs (2nd ed, 2003) [3.2].
[13] Lawbook Co, Quick on Costs, vol 1 (at Update 45) [2.1220], [3.30].
Legislation as to costs
The essential argument of the plaintiff is that the words “regulating costs” in s 88E(1)(f), in their context, only refer to party/party costs and do not include solicitor/client costs. It is therefore argued that the President was not empowered to make Rule 31(2) which is concerned with solicitor/client costs. I note in passing that no similar argument is made by the plaintiff with respect to R 31(1).
The plaintiff refers to ss 88F, 95 and 95A in support of his argument. He submits that the word “costs” in s 88E(1) is presumed to have the same meaning when used in each of those sections and that it refers to party/party costs. However, a reading of ss 88F, 95 and 95A indicates that word “costs” is not referred to by itself as a single expression.
In s 88F, the expression is “costs of proceedings” which colours the meaning of costs and indicates that the section is referring to party/party costs.
Section 95 is headed “Costs” and the content of each of the subsections thereunder reveals that various aspects of “costs” are included in that section. Subsections 95(1), (2) and (3) refer to reasonable costs which a party may be awarded to be paid for by the compensating authority. These provisions are unique to the compensation jurisdiction and would not be strictly characterised as either party/party costs or solicitor/client costs. These are costs which are required to be paid by the relevant compensating authority to a party, whether the party wins, loses or partially wins (“a draw”), unless the party has acted unreasonably, frivolously or vexatiously.
Subsection 95(4) refers to “costs to cover professional advice or assistance” and appears on its face to empower the awarding of costs for such advice or assistance against the compensating authority, or in the context of party/party costs or where the advice or assistance has been rendered in a context of a solicitor/client relationship. Subsection 95(5) places a limitation on the amount which can be awarded for legal costs and applies to the costs referred to in subsections 95(1), (2) and (3) so that the compensating authority is only required to pay costs which are reasonably incurred and cannot exceed 85 per cent of the amount that would be allowable under the relevant Supreme Court scale. For these reasons the section overall does not support the plaintiff’s argument that the use of the term “costs” in s 95 is the same as s 88E(1)(f) and refers only to party/party costs.
Section 95A has a heading “Costs liability of representatives”. By reason of the definition in subsection (1), “professional representative” means representation by a legal practitioner or other person acting as an agent for a party to proceedings before the Tribunal. In the situation, where the professional representative is a legal practitioner, subsection (3) empowers the Tribunal to order that all or any of the solicitor/client costs may be disallowed or that the legal practitioner be required to repay to the client the whole or part of any money paid on account of costs, in the circumstances described in subsections (2) and (4). The word “costs” in those subsections, in their context, clearly refer to solicitor/client costs. Having regard to s 95, s 95A applies to solicitor/client costs over and above the provision of costs which would be payable by the compensating authority. Therefore the provisions of s 95A do not support the plaintiff’s argument. On the contrary, it gives support to the interpretation that “costs” in s 88E(1)(f) include solicitor/client costs.
Finally I note that in s 88G, there is no specific reference to “costs” within the section. The heading above the section refers to “costs of representation” and although the heading does not dictate the interpretation of the section, the content of the section, as discussed hereafter, indicates that the topic is the charging and recovery of work done by a representative for a worker. In the situation in which the representative is a solicitor, this would include the charging and recovery by a solicitor of solicitor/client costs.
In summary, the meaning of the word “costs” in s 88E(1)(f) and the power conferred on the President to make rules on costs should not be read down by implication as contended for by the plaintiff to refer only to party/party costs. The term “costs” is broad and the content of the other sections relied on by the plaintiff do not imply that the expression is limited. If anything, those provisions reinforce its breadth.
Enabling powers for Rule 31(2)
The intervenor argued that apart from s 88E(1)(f), Rule 31(2) was capable of being supported by subsection 88E(1)(c) as “regulating the practice and procedure of the Tribunal”. It was submitted that the enforceability and recoverability of costs by a solicitor against a client has been viewed as a matter of practice and procedure of a court. Reference was made not only to the history of the workers’ compensation legislation and rule making powers[14] but also to s 59 of the Federal Court of Australia Act 1976 (Cth) which was interpreted by Lochart J in Keith Hercules & Sons v Steedman[15] as conferring sufficiently wide powers to make rules concerning taxation of costs as between solicitor and client by reference to making rules “for or in relation to practice and procedure”.
[14] Notably Clauses 12 and 14 of Schedule 2 of the Workmen’s Compensation Act 1900 (SA).
[15] Keith Hercules & Sons v Steedman (1987) 17 FCR 290, 298.
As indicated earlier in the discussion of the history of rule making powers of the Court and Tribunal in relation to workers’ compensation, the power of the President to make rules has been extended beyond the simple expression of “practice and procedure”. Although arguably all of the matters set out in s 88E(1) could be characterised as greater particularisation of aspects of practice and procedure of the Tribunal.
In this case it is not necessary to rely on s 88E(1)(c) alone, as there is a specific reference to the power to regulate costs in s 88E(1)(f).
The intervener also argued that Rule 31(2) was capable of being supported by s 88E(1)(g), namely, dealing with “any other matter necessary or expedient for the effective and efficient operation of the Tribunal”. It was submitted that this permitted the President to have regard to the objects of the Act in subsections 2(1)(b), (c) and (f) of the Act referred to earlier at [31].
Again it is not necessary to rely on a general expression because of the specific reference to regulating costs in s 88E(1)(f). However, these further expressions of the rule making power in s 88E(1) as a whole emphasise the broad scope of the power given to the President to make Rules and reinforce that “costs” should not be interpreted in such a confined manner as the plaintiff submits.
Section 88G and regulation of a scale of costs
It was common ground that the Executive Council had not promulgated any regulations pursuant to s 88G of the Act.
The argument of the plaintiff is that unless “costs” in s 88E(1)(f) is to be interpreted as limited to party/party costs, then s 88E(1)(f) would be inconsistent with the operation of s 88G. It was submitted that s 88G was intended to cover the field on solicitor/client costs and that such costs could only be controlled by regulation of the Executive Council. Therefore, the plaintiff submitted, Rule 31(2) which purported to control solicitor/client costs by a rule of the President, was invalid. It was also submitted that the obligation imposed by s 88G(2) to consult the Crown Solicitor is inconsistent with the legislative intention which enables the President to make rules without such a consultative process being undertaken.
In my view, there is no inconsistency between ss 88E(1)(f) and 88G.
In so concluding I have had regard to the following matters. First, s 88G confers a power on the Executive Council to pass a regulation fixing a scale of costs for work done by a representative, who may not always be a legal practitioner. Secondly, the section provides that a penalty may be imposed if the representative either charges or seeks to recover more than the scale fixed by regulation. The fixing of a penalty could only be done through legislation and could not be imposed by operation of a rule. Thirdly, the provision does not purport to be exhaustive of the subject matter of solicitor/client costs which can be charged or recovered. It says nothing about the circumstances by which such costs can be recovered and the process of their recovery.[16] Indeed the content of Rule 31(2) itself is indicative of matters which would not be included in the fixing of a scale of costs of representation, as discussed below. Finally, the fact that the making of a rule by the President does not specifically require consultation with the Crown Solicitor and instead requires the President to consult within the Tribunal in accordance with s 88E(2), does not exclude other consultation and does not imply that there is no input which is given by others as to their content. Rules are a form of subordinate legislation and as such they are subject to Parliamentary scrutiny.
[16] Jacobs v OneSteel Manufacturing Pty Ltd and WorkCover Corporation of SA (2006) 93 SASR 568,579-80 [36] and [38] (Debelle J).
In summary, there is no inconsistency between the two provisions and no reason why they cannot have a cumulative and complementary operation with their respective spheres of operation.
Rule 31(2)
Rule 31(2) provides that a representative of a worker is not entitled to recover from that worker any costs in respect of proceedings in addition to those which are payable by the compensating authority; nor is the representative entitled to claim a lien in respect of those costs or deduct them from a sum awarded as compensation unless the costs have been awarded by a Presidential Member. The Rule specifically addresses the awarding of costs and the recovery of costs by the representative of a worker; it is not a rule which is applicable to representatives of any other party. In referring to a representative of a worker, Rule 31(2) thereby covers a legal practitioner and therefore the rule would include solicitor/client costs. Rule 31(1) by contrast concerns the representatives of parties in general.
Sub-rules 31(2)(a) to (f), set out in detail the procedure to be followed if additional costs are being sought to be awarded and recovered by a representative. These sub-rules focus on procedural matters concerning the preconditions for judicial assessment of costs. In short, the Rule is not providing for a scale of costs and is therefore different in content to the regulating power expressed in s 88G. As the Rule covers the topic of costs, then prima facie it is within the rule making power expressed in s 88E(1)(f).
Reasonable proportionality
Plaintiff submits that even if “costs” in s 88E(1)(f) includes solicitor/client costs, it is nevertheless invalid as it is not reasonably proportionate to the rule making power to “regulate costs”. He particularly refers to its infringement of the substantive legal rights of a solicitor and also argues that it contradicts express objects of the Act. As to the first argument, the plaintiff points to the restriction of a solicitor’s common law right to recover fees which are the subject of a retainer by either suing in a court or claiming a lien for the costs. He emphasises that the Rule bars the right of a solicitor to recover any costs from a worker for representing that worker, other than that which is payable by a compensating authority, unless additional costs are awarded by a Presidential Member. He points to what he calls the “meagre” amount which is allowed for costs which are payable by a compensating authority as set out in Regulation 7.[17] The plaintiff also points to the fact that the solicitor’s costs in respect of parties other than workers are not the subject of the limitation in Rule 31(2).
[17] Workers Rehabilitation and Compensation (Dispute Resolution) Regulations 1996 (SA).
In respect of these arguments, I note that the Rule says nothing about the right to charge solicitor/client costs. It does not bar a right to sue for solicitor/client costs. Further, the Rule does not bar a lien or deduction of solicitors’ costs from compensation monies in respect of additional costs, so long as those additional costs have been awarded by a judicial process. It is therefore a qualified limitation on the common law right which ensures that there is a proper process so that the costs sought to be recovered by the solicitor through a lien or deduction from compensation are assessed to be fair and reasonable. This is a restriction which is proportionate to the rule making power.
As to the allegation that costs payable by the compensating authority are “meagre”, I note that the solicitors are assured of payment by the compensating authority even if their client is not successful (absent the worker or the representative acting unreasonably etc).[18] Furthermore, those costs are set by Regulation of Executive Council and cannot be used to argue that the Rule which relies on that Regulation thereby lacks proportionality. The additional costs which may be awarded is to be judicially decided taking into account the amount of money involved, the importance of the case, the complexity of the issues in dispute and any other relevant matter. Finally I note that although Rule 31(2) operates only in respect of the representative of a worker, all of the representatives of parties are subject to the same capping in respect of the amount which can be charged for representation, namely not greater than the Supreme Court scale unless there are exceptional circumstances as set out in Rule 31(1).
[18] Workers Rehabilitation and Compensation Act 1986 (SA) s 95(3) and s 95A(2), (3) and (4).
Such an interpretation is consistent with the overall history as demonstrated through the above discussion on the framework of the legislation, the intent of the legislation and certainly the protection of compensation payments made to workers. It also would fit well within the objects indicated in s 2, notably incentives to encourage efficiency and discourage abuses, as well as to reduce litigation and adversarial contests. Costs are one way in which there can be control and limitation of unnecessarily prolix litigation before the Tribunal.
In conclusion, these considerations do not indicate that the Rule is unreasonably disproportionate to the rule making power in s 88E(1)(f).
Sections 41 and 42 of the Legal Practitioners Act 1981 (SA)
The provisions of ss 41 and 42 of the Legal Practitioners Act 1981 (SA) do not regulate all matters with respect to charging of solicitor/client costs. They do not confer an entitlement to costs nor do they impose a liability on a person to pay costs. Instead the sections assume those factors. In any event, being general provisions, they may also be modified by more specific legislation. The unique scheme of the Act in relation to costs containment and the power given in s 88E(1)(f) to regulate costs implies the power “to regulate both the circumstances in which costs may be payable and the amount of those costs.”[19] For these reasons I do not consider that these provisions support the plaintiff’s submission that Rule 31(2) is invalid.
[19] Jacobs v OneSteel Manufacturing Pty Ltd and WorkCover Corporation of SA (2006) 93 SASR 568, [38] (Debelle J).
Conclusion
For the reasons given, I conclude that the declarations of invalidity and ultra vires sought by the plaintiff in respect of Rule 31(2) should be refused.
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