Return to Work Corporation of South Australia v Heinjus - [2020] SASCFC 97

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court)
RETURN TO WORK CORPORATION OF SOUTH AUSTRALIA v HEINJUS
[2020] SASCFC 97
Judgment of The Full Court
(The Honourable Chief Justice Kourakis, The Honourable Justice Stanley and The Honourable Justice Parker)
21 October 2020
WORKERS' COMPENSATION - PROCEEDINGS TO OBTAIN COMPENSATION - DETERMINATION OF CLAIMS - COSTS - GENERALLY
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - GENERAL MATTERS - POWER TO AWARD GENERALLY - STATUTORY BASIS GENERALLY
Appeal against the decision of the Full Bench of the South Australian Employment Tribunal (the Tribunal) awarding costs in favour of the respondent in the maximum amount payable pursuant to reg 44 of the Return to Work Regulations 2015 (SA) made under the Return to Work Act 2014 (SA).
The respondent made a claim for compensation for a right arm injury in June 2017. The dispute as to average weekly earnings was referred to the Tribunal for conciliation by one of its commissioners. The conciliation conference resulted in an increase of the respondent’s average weekly earnings. The parties also agreed that the respondent was entitled to an award of costs, to be agreed or fixed by the Tribunal.
It fell to the Full Bench to exercise the discretion to award costs afresh, after the decision of the conciliation Commissioner to award less than the maximum amount payable was affirmed by a Deputy President of the Tribunal.
The question of law raised by this appeal concerns the underlying principle, on which the discretion to fix an amount between the lower and higher of two maxima provided for by reg 44, should be exercised. The Return to Work Corporation (RTW) contends that the Tribunal must fix a lump sum between the two maxima which is proportionate to the nature and complexity of the dispute referred to the conciliation conference. It contends that the maxima are not only limits, but operate also as yardsticks against which the lump sum must be fixed. The respondent contends that the maxima operate only to delimit the awards for costs which are reasonably incurred, and appropriately charged.
Held per Kourakis CJ (Stanley and Parker JJ agreeing) dismissing the appeal:
1. Regulation 44(1)(b)(ii) of the Return to Work Regulations 2015 (SA) imposes an upper limit on the costs reasonably incurred and charged at no more than 85 percent of the Supreme Court scale. It does not prescribe a special scale, peculiar to conciliations, against which costs are to be fixed according to the relative complexity of the subject matter of the conciliation.
2. The appellant’s contention that the lower maximum is the amount which is awarded for an average or most commonly encountered conciliation is rejected.
Criminal Injuries Compensation Act 1978 (SA) s 7; Return to Work Act 2014 (SA) s 106; Return to Work Regulations 2015 (SA) reg 44; Wrongs Act 1936 (SA) s 35A, referred to.
Heinjus v Return to Work Corporation of South Australia [2020] SAET 24; House v The King (1936) 55 CLR 499; Packer v Cameron (1989) 54 SASR 246; Percario v Kordysz (1989) 54 SASR 259; State of South Australia v Bole (1994) 64 SASR 379, discussed.

WORDS AND PHRASES CONSIDERED/DEFINED
"is entitled to an award of costs of an amount greater than $745.00 (indexed)"

RETURN TO WORK CORPORATION OF SOUTH AUSTRALIA v HEINJUS
[2020] SASCFC 97
Full Court: Kourakis CJ, Stanley and Parker JJ

KOURAKIS CJ: This is an appeal against the decision of the Full Bench (the Full Bench) of the South Australian Employment Tribunal (the Tribunal), awarding costs in favour of the respondent in the maximum amount payable pursuant to reg 44 of the Return to Work Regulations 2015 (SA) (the Regulations) made under the Return to Work Act 2014 (SA) (the RTW Act). It fell to the Full Bench, for reasons which are briefly explained below, to exercise the discretion to award costs afresh, after the decision of a conciliation Commissioner to award less than the maximum amount payable was affirmed by a Deputy President of the Tribunal.
The making of reg 44 is contemplated by s 106 of the RTW Act, which provides that a party represented in proceedings under the RTW Act is, subject to any limit imposed by the Act or a regulation, entitled to his or her reasonable costs. Regulation 44 relevantly provides that the costs payable to a party represented in a compulsory conciliation conference cannot exceed $745.00 (indexed), or if the Tribunal determines that the party is entitled to an award of costs of a greater amount, $2,464.00 (indexed). The question of law raised by this appeal concerns the underlying principle, on which the discretion to fix an amount between the lower and higher of those maxima, should be exercised. The Return to Work Corporation (RTW) contends that the Tribunal must fix a lump sum between the two maxima which is proportionate to the nature and complexity of the dispute referred to the conciliation conference. RTW accepts that, in fixing that amount, the Tribunal may have regard to the measure of costs reasonably incurred, but only as an indicator of the relative complexity of the subject matter of the dispute. In short, RTW contends that the maxima are not only limits, but operate also as yardsticks against which the lump sum must be fixed.
The respondent, on the other hand, contends that the maxima operate only to delimit the awards for costs which are reasonably incurred, and appropriately charged. The respondent contends that, as a general rule, the maximum award will be made if the worker establishes that costs at, or above, the higher of the maxima were reasonably incurred.
For the reasons which follow, I would dismiss the appeal. I accept the respondent’s construction of the Regulations and his contention as to the relevant principle which must guide its application.
The litigation
The respondent made a claim for compensation for a right arm injury in June 2017. RTW accepted the claim for weekly income maintenance and determined the respondent’s average weekly earnings to be $970.65. In October 2017, the respondent filed an Application for Review, claiming that his average weekly earnings payable under the Pastoral Award 2010 had been miscalculated. On an internal review, RTW confirmed its decision.
The dispute was referred to the Tribunal for conciliation by one of its commissioners. A Book of Documents, 42 pages long, was filed. A directions hearing was held on 15 November 2017, at which the conciliation conference was scheduled for 13 December 2017. The respondent was directed to file further and better particulars, including a schedule calculating his claimed average weekly earnings (the wages schedule). The conciliation conference proceeded over one hour on 13 December 2017 and resulted in an increase of the respondent’s average weekly earnings to $1,167.12. The parties also agreed that the respondent was entitled to an award of costs, to be agreed or fixed by the Tribunal.
In accordance with r 125(8) of the Tribunal’s Rules, the respondent presented to RTW an internal document setting out his solicitor’s work in progress (WIP) report. There were 22 charged items, which amounted to $3,791.98. A substantial part of the WIP related to the preparation of the wages schedule. On the basis of the WIP document, the respondent claimed the maximum amount payable, pursuant to reg 44, of $2,935.00. Offers and counter offers on that claim for costs were exchanged between RTW and the respondent’s solicitor. By letter dated 27 April 2018, RTW’s solicitors contested the reasonableness and quantum of some of the items on the WIP document. No agreement was reached.
The adjudication of costs came on before the Commissioner who had conciliated the dispute. The Commissioner observed that the respondent’s claim was not particularly complex, but that it did require a detailed consideration of a complex award. The Commissioner found that the preparation by the respondent’s solicitor ‘was key to parties being able to resolve the claim at the conference’. The Commissioner did not consider it necessary to undertake an item-by-item analysis of the WIP charges or of the objections made by RTW. Instead, after referring to the nature and complexity of the dispute, the Commissioner determined that the respondent was entitled to costs greater than the lower maximum, but applied ‘a broad axe’ to award the respondent the sum of $1,300.00 in costs.
The respondent appealed against that determination to a Deputy President of the Tribunal. The Deputy President held that the appeal was constrained by the principles in House v The King,[1] and found that there was no vitiating error in the exercise of the Commissioner’s discretion. The respondent appealed to the Full Bench. The Full Bench held that a review of a Commissioner’s cost decision must be conducted afresh, and that it was not confined to review for errors of the kind identified in House v The King. It therefore proceeded to consider afresh, in the exercise of its own discretion, the costs order which should be made.
[1] House v The King (1936) 55 CLR 499.
Reasons for decision
Calligeros DPJ, with whom Dolphin PJ and Hannon DPJ agreed, referred to the approach to lump sum costs awards in the Supreme Court of New South Wales, which had been described by Bathurst CJ in that Court’s report. It appears from the report that in the Supreme Court of New South Wales the exercise of the power to make lump sum costs orders, particularly in small matters, is encouraged, in order to save delay and cost. Calligeros DPJ continued:[2]
[58]I make three observations about the extent to which Bathurst CJ’s comments should be applied to Tribunal matters. While this matter is indeed a small matter by Tribunal standards, a ‘smaller matter’ in the NSW Supreme Court is likely to be more substantial in terms of time and cost than most Tribunal matters. Next, the SAET Rules help avoid some of the delay and cost associated with a typical taxation of costs, one of Bathurst CJ’s main motivations for making lump sum awards of costs. Finally, the WIP record provided to the Commissioner by Mr Heinjus’ solicitors under rule 125(8) of the SAET Rules comprised only 23 items. It was one page in length. The very limited nature of the claim for costs in issue raises the question whether a lump sum award was appropriate to make.
[59]The cases where lump sum awards for costs were made referred to in Hislop are all claims for costs of hundreds of thousands of dollars. The amount claimed was typically in the order of $500,000. In Hislop the claim for costs was $550,000 and the lump sum award made by Gleeson J was $425,000. [Her] Honour allowed 80% of the amount claimed for solicitor’s fees and 64% and 90% of the amount claimed for counsel fees by senior and junior counsel respectively. The deductions were largely a reflection of the extent to which the rates claimed exceeded the Federal Court Scale of Costs and the National Guide to Counsel Fees.
[60]In Hislop, Gleeson J referred to and approved of the view expressed by Clarke JA in Wentworth v Wentworth where his Honour said:
(t)he approach taken to estimate costs must be logical, fair and reasonable. The power should only be exercised when the Court considers that it can do so fairly between the parties, and that includes sufficient confidence in arriving at an appropriate sum on the materials available.[3]
…
[62]I do not mean to suggest that there is no place for a lump sum award of costs in a RTW Act matter. My experience with adjudications of costs suggests that there are cases where it is in the interests of justice to make a lump sum award, consistent with the objectives of the Acts referred to above, and in compliance with the conditions set out in Wentworth. However this matter is not a matter where it was appropriate to make a lump sum award for two main reasons.
(Footnote in original)
[2]    Heinjus v Return to Work Corporation of South Australia [2020] SAET 24 at [58]-[60], [62].
[3]    Unreported, 21 February 1996, NSW Court of Appeal per Clarke JA.
I interpolate here that his Honour’s consideration so far, of the respective merits of awarding lump sum costs on an adjudication, does not directly address the controversy over the questions of the construction of, and underlying principle prescribed by, reg 44. Rather, his Honour’s discussion assumes that the correct approach is to determine the reasonable costs of the worker’s representative, and debates only whether the most appropriate methodology is an item by item taxation or the estimation of an equivalent lump sum. The contention of RTW is that reg 44 does not provide for an award which is commensurate to the reasonable costs incurred, but requires instead an amount to be fixed between the two maxima, reflecting the relative complexity of the dispute against the generality of disputes referred to conciliation.
Calligeros DPJ then continued and explained why it was inappropriate to reduce the costs claimed with the broad axe, some may say tomahawk, wielded by the Commissioner. Calligeros DPJ held that the simple, one page WIP document provided by the solicitor warranted a more surgical approach to each item and an adjudication on the validity of each of RTW’s objections.
Calligeros DPJ concluded by expressly stating the premise on which he had construed and applied reg 44. His Honour derived the following principle from the text of s 106 of the RTW Act and reg 44:[4]
[66]In claiming for the costs of conciliation an applicant must show that the claim is reasonable under s 106(1) in that the work performed pertains to the subject of the application for review. The costs must also be authorised by the regulations and have been reasonably incurred under s 106(2)(b). That will generally mean that the amounts claimed for the work undertaken are charged at no more than 85% of the Supreme Court scale on a party and party basis. If the amount claimed meets those requirements and exceeds the maximum amount payable, an applicant is entitled to receive the maximum which applies from time to time.
[4] Heinjus v Return to Work Corporation of South Australia [2020] SAET 24 at [66].
It is that principle which is challenged by RTW on this appeal.
Legislation
Section 106 of the RTW Act provides:
106—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)     any initial reconsideration of a decision under Division 4; and
(b)     any subsequent proceedings for resolution of the matter before the Tribunal.
(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.
…
(6) 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.
…
I make the following general observation about s 106(1). A limit on the reasonable costs which might otherwise be payable may operate in a number of ways. The limit may exclude charges for particular work. It may impose a maximum amount that is payable for a proceeding in its entirety, or for a particular step in a proceeding. Alternatively, a limit may be imposed by reference to a scale of charges made by regulation, or by reference to the scale of another court or tribunal, in the manner effected by s 106(6) of the RTW Act. Arguably, even the percentage fixed by s 106(6) of the RTW Act may further be reduced by regulation.
Depending on the nature and degree of the limit imposed, a question might arise as to whether a limit imposed by a regulation extends beyond the power conferred by s 106(1) of the RTW Act, because the resulting entitlement does not bear any meaningful relationship to a party’s reasonable costs. The power allowed to the Executive, in the exercise of its discretion to make a regulation, is to impose a limit on an award of costs. Costs are generally calculated by reference to the work reasonably done valued against a reasonable scale. That is the methodology contemplated by s 106(6) of the RTW Act. If an award of costs, sitting between the two maxima of reg 44, is made primarily by reference to the complexity of the dispute relative to other disputes, it may not bear any relationship to the two traditional determinants of costs. Even though the question of the validity of the regulation does not arise on this appeal, the primary rule enacted by s 106(1) of the RTW, and the historical approach to quantifying costs, inform the proper construction of reg 44.
Regulation 44 of the Regulations provides:
44—Costs (section 106(1) of Act)
(1) For the purposes of section 106(1) of the Act, the costs awarded to a party who is represented in proceedings that take place under Part 6 of the Act (excluding reasonably incurred disbursements such as counsel fees) cannot exceed—
(a) for assistance in the preparation and lodgement of an application to the Tribunal—$402 (indexed); and
(b) for participation in proceedings before the Tribunal up to and including a compulsory conciliation conference under Division 5 of that Part (including the preparation of any necessary documentation)—
(i) $745 (indexed); or
(ii) if the Tribunal determines, on application by the party, that the party is entitled to an award of costs of an amount greater than $745 (indexed)—$2 464 (indexed); and
(c) for participation in proceedings before the Tribunal if they extend beyond a compulsory conciliation conference—the limit applying under section 106(6) of the Act.
…
(4) For the purposes of section 106(2)(b) of the Act, costs may be awarded to reimburse disbursements (including counsel fees) incurred by a party to proceedings before the Tribunal up to a reasonable amount reasonably incurred, subject to the qualification that costs for medical services reimbursed as disbursements in the proceedings are limited to the scales of charges that apply for the purposes of section 33 of the Act or, if a service is not covered by a scale of charges under that section, to an amount determined in accordance with the principles that apply under that section.
(5) If a limit on costs prescribed by subregulation (1) is varied or adjusted following the commencement of a process in relation to which an award of costs may be made under section 106 of the Act, the award of costs is subject to the limit that applied when the process was commenced.
At first glance, it is difficult to see the purpose of prescribing two maxima in reg 44. If, consistently with the authorisation in s 106, both maxima are to operate as limits on the award that can be made, it is difficult to see what purpose is served by the lower maximum. It is important to keep in mind that the lower figure can only operate as a maximum; it cannot be a minimum payment, because the regulation is made in exercise of the power contemplated by s 106(1) of the RTW to impose limits on the costs payable. If a worker’s representative were to make a claim for the lower maximum, $745.00, RTW may yet object on the ground that it exceeds the limit imposed by s 106(6) of the RTW Act. If RTW were to show that the reasonable costs were less than $745.00 (indexed), an award in the sum of $745.00 would exceed the limit imposed by s 106 of the RTW Act.

Next, it is necessary to address the meaning of the phrase ‘is entitled to an award of costs of an amount greater than $745.00 (indexed)’. The most natural construction is that the phrase refers back to s 106(1) and the party’s entitlement to reasonable costs, subject to the 85 percent Supreme Court scale limit imposed by s 106(6) of the RTW Act. However, RTW contends otherwise. It submits that ‘entitled’ means ‘justified’ and that the claimant must show good reason for a higher award by reference to the subject matter of the conciliation and its relative complexity and, as a result, the time taken to conciliate it relative to other matters. Substantial difficulties stand in the way of that construction. The disputes referred for conciliation might vary widely, from a dispute over the reasonableness of the cost of a single medical consultation, to a controversy over a substantial lump sum compensation payment, or a dispute over whether a worker is seriously injured and therefore entitled to income maintenance beyond a period of 104 weeks. There is no textual basis for selecting one of those kinds of claims over another for the purpose of identifying the average or most common claim.
An average claim could not sensibly be identified without reserving, on the spectrum between the maxima, some bandwidth for each broad class of claim, dedicating the lowest bandwidth to, for example, medical costs compensation claims and the highest bandwidth to disputes over whether a worker is seriously injured. That approach bears no relationship to the adjudication methodology contemplated by s 106 of the RTW Act which is to determine whether the professional services provided by the representative are reasonably related to the subject matter of the conciliation and are reasonably charged.
Even if it were possible to identify a single ‘average’ claim without differentiating between the diverse compensation claims which may be made under the RTW Act, there is no obvious textual foundation on which to decide that the lower of the maxima applies to a ‘simple’, ‘average’ or ‘complex’ dispute. I can understand why, as a matter of good advocacy, RTW has chosen to contend that the lower maximum refers to the average claim, but it is not obvious to me why it should not be taken instead to refer to a complex claim. If that were so, only exceptionally complex or protracted disputes could justify an award higher that the lower maximum, and real questions would arise as to the proportionality of the regulation to the power to make it, and as to its validity.
The only workable approach which makes some sense of the prescription of two maxima is to treat the lower of the two as the maximum which may be ordered on a costs claim made by a party without any substantiation by reference to an itemised claim referable to a scale. That construction fits coherently with the power to exceed the lower maximum when an entitlement to a higher award of costs is demonstrated. It does not follow, however, as I earlier observed, that if a claim for the lower maximum is made without any substantiation, that it is not open to RTW to contend that a lesser award should be made, on the ground that the maximum imposed by reg 44 would still exceed the limit in s 106(6). In effect, the lower maximum serves to put the persuasive onus on the opposing party to show that it would exceed the limit imposed by s 106(6) of the RTW Act. On the other hand, a party who can show that he or she is entitled to an award of costs in excess of the lower maximum by furnishing material which shows that the value of work, assessed by reference to an appropriate scale, is materially in excess of the lower of the two maxima, is entitled to a higher award in that amount.
I turn to the remaining question which is how the entitlement in excess of the lower of the two maxima is quantified. I reject the RTW’s contentions for the reasons I have already foreshadowed. First, I reject RTW’s contention that the lower maximum is the amount which is awarded for an average or most commonly encountered conciliation. Secondly, s 106(1) of the RTW Act contemplates the imposition by regulation of limits on reasonably incurred costs; it does not contemplate the making of an arbitrary scale against which lump sum costs will be arbitrated.
Thirdly, the historical method for the adjudication of costs is expressly contemplated by the incorporation by reference of the Supreme Court scale. In s 106(1) of the RTW Act, the absence of express language departing from that method suggests that the higher maximum prescribed by reg 44 is intended as a limit and not a yardstick.
I acknowledge that this Court has adopted a ‘relative severity’ approach to the statutory scale against which pain and suffering for personal injuries are assessed. In Packer v Cameron[5] and Percario v Kordysz[6] this Court considered the statutory scale for the evaluation and assessment of pain and suffering damages for personal injury, introduced by s 35A of the Wrongs Act 1936 (SA). The Court held that the maximum award under the scale did not operate as a bare limit to be applied, after the assessment of damages in accordance with common law principles. Rather, it required a court to assign to the claimant a figure that compares the severity of that claimant’s non-economic loss with the worst possible loss that anyone could suffer.[7] The same approach was taken to the scale enacted by s 7 of the Criminal Injuries Compensation Act 1978 (SA) in State of South Australia v Bole.[8]In sentencing, too, statutory minimum and maximum sentences are treated not just as lower and higher limits, but as yardsticks against which to fix a proportionate sentence according to the relative seriousness of the offence and relative strength of any personal mitigating circumstances. However, in both the assessment of damages and in sentencing, justice generally demands that like cases be treated alike; and that sentences or awards of damages reflect the differences between cases in a proportionate way. No such principle operates in respect to costs. The very use of the word ‘limit’ in s 106 of the RTW Act suggests otherwise.
[5] (1989) 54 SASR 246.
[6] (1989) 54 SASR 259.
[7] Packer v Cameron (1989) 54 SASR 246 at 251-252 (Cox J), 257 (Duggan J); Percario v Kordysz (1989) 54 SASR 259 at 260 (King CJ), 269-270 (Perry J).
[8] (1994) 64 SASR 379.
For the above reasons, I would hold that reg 44(1)(b)(ii) imposes an upper limit on the costs reasonably incurred and charged at no more than 85 percent of the Supreme Court scale. It does not prescribe a special scale, peculiar to conciliations, against which costs are to be fixed according to the relative complexity of the subject matter of the conciliation.
Conclusion
I would dismiss the appeal.
STANLEY J: I would dismiss the appeal. I agree with the reasons of the Chief Justice.
PARKER J: I would dismiss the appeal. I agree with the reasons of the Chief Justice.