SIA v Child & Adolescent Health Service (Princess Margaret Hospital) - [2015] WADC 56

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION: PERTH

CITATION: SIA -v- CHILD & ADOLESCENT HEALTH SERVICE (PRINCESS MARGARET HOSPITAL) [2015] WADC 56

CORAM: KEEN DCJ

HEARD: 11 MAY 2015

DELIVERED : 19 MAY 2015

FILE NO/S: APP 123 of 2014

BETWEEN: DEWI SARI SIA
Appellant
AND
CHILD & ADOLESCENT HEALTH SERVICE (PRINCESS MARGARET HOSPITAL)
Respondent

ON APPEAL FROM:
Jurisdiction              :  WORKCOVER WA
Coram  :ARBITRATOR J MENGLER
Citation  :A15996

Catchwords:

Workers' compensation appeal - Award of costs - Whether arbitrator's decision miscarried - Turns on own facts

Legislation:

Workers' Compensation and Injury Management Act 1981

Result:

Appeal allowed

Representation:

Counsel:

Appellant: Mr J C Azzopardi
Respondent: Mr J R Ludlow

Solicitors:

Appellant: Chapmans
Respondent: HWL Ebsworth Lawyers

Case(s) referred to in judgment(s):

Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd [1951] 1 All ER 873
Beale v GIO of NSW (1997) 48 NSWLR 430
Bowen v Alsanto Nominees Pty Ltd [2011] WASCA 39
House v The King (1936) 55 CLR 499
Hughes v Western Australian Cricket Association (1986) ATPR 40-748
McKay v Commission for Main Roads [2013] WASCA 135(S)
Mount Lawley Pty Ltd v Planning Commission (WA) [2004] WASCA 149
Oshlack v Richmond River Council (1998) 193 CLR 72
Ritter v Godfrey (1920) 2 KB 47

KEEN DCJ: This is an appeal from a decision of an arbitrator in the Workers' Compensation Arbitration Service.
The appeal is limited to the arbitrator's decision as it relates to costs of the arbitration.

Background

The arbitration was heard by Arbitrator J Mengler on 30 October 2014. The arbitrator delivered his decision and published his reasons on 14 November 2014.
The issue before the arbitrator was whether the respondent to the appeal (respondent to the arbitration) was liable to pay certain reasonable expenses of the appellant (applicant) pursuant to sch 1 of the Workers' Compensation and Injury Management Act 1981 (the Act). Specifically, those expenses comprised gym membership for a period 27 June 2013 to 26 June 2014, in the sum of $1,008; chiropractic treatment from 24 April 2014 to 16 October 2014, in the sum of $770; and physiotherapy/Pilates treatments from 31 July 2014 to 16 October 2014, in the sum of $630.
After receiving evidence by way of reports and other material the arbitrator determined that the appellant should receive the physiotherapy and Pilates expenses incurred by her in the sum of $630 but not the gym and chiropractic expenses that were claimed.
The arbitrator concluded his findings at [35] of his reasons in the following terms:
In my view the applicant has succeeded in her claim to a significant extent and, even though the monetary outcome is less than 50% of the quantum of her claim, I consider she should recover 50% of her legal costs and disbursements of her WorkCover WA proceedings.
It is against that final determination on costs that the appeal is brought.

The appeal

The appeal is brought on two bases:
1.That the arbitrator erred in his discretion to award costs as he did.
2.In the alternative, that the arbitrator did not give adequate reasons for only allowing 50% of the appellant's costs.
The right to appeal to this court arises under s 247 of the Act. There is no issue between the parties that the appellant requires leave of the court to appeal the decision and that the matter is governed by s 247(2)(b) with the effect that the court should not grant leave to appeal unless a question of law is involved.
The appellant says that both of the matters referred to above disclose a question of law and therefore leave ought to be granted.

Appellant's submissions

The appellant relies upon s 264 of the Act which provides for costs of parties in proceedings in WorkCover WA.
Specifically, the appellant relies upon s 264(1), s 264(2) and s 264(4) in the following terms:
Costs to be determined by dispute resolution authority
(1)Subject to this Division, costs are in the discretion of the relevant dispute resolution authority.
(2)A dispute resolution authority may determine by whom, to whom and to what extent costs are to be paid.
…
(4)Any party to a proceeding may apply to a dispute resolution authority for an order as to costs.
The appellant argues that the normal rules as to costs apply, that is to say those that can be discerned from the provisions of O 66 Rules of the Supreme Court 1971 (RSC) and the relevant case law. It is argued that the starting point in respect of costs is that they should follow the event with the successful party recovering his or her costs in the absence of special circumstances justifying some other order: Ritter v Godfrey (1920) 2 KB 47, 152; Hughes v Western Australian Cricket Association (1986) ATPR 40-748, 48.
The appellant also relies upon Oshlack v Richmond River Council (1998) 193 CLR 72, that the discretion should be exercised judicially in accordance with established principles and factors directly connected with the litigation. The appellant relies upon [67] in Oshlack to the effect that:
A successful party is entitled to an award of costs in its favour and the principle is grounded in reasons of fairness and policy and operates whether the successful party is the plaintiff or the defendant. Costs are not awarded to punish an unsuccessful party. The primary purpose of an award of costs is to indemnify the successful party. If the litigation had not been brought, or defended, by an unsuccessful party the successful party would not have incurred the expense which it did.
It is argued that there are no exceptional circumstances to warrant an apportionment of the costs. The two areas where claims were made unsuccessfully were not discrete or severable items. It was necessary for the appellant to argue the case as a whole and all of the expenses incurred by her for which she claimed were dealt with in the same medical reports. Accordingly, it was not a case of severance of each of those items of expense which required discrete and separate proof.
It is also argued that in his reasons the arbitrator gave no explanation or reason as to how he came to the conclusion that he did that the appellant should receive only 50% of her costs.
It is the appellant's case that she was required to bring the application before WorkCover WA because the respondent disputed the application in its entirety and therefore she should be fully indemnified.

Respondent's submissions and observations arising therefrom

The respondent's submissions are that the starting point in this matter is again s 264 of the Act. As I have noted, there is no dispute that leave is required and it is necessary for the appellant to show that a question of law is involved.
The respondent argues that the order made by the arbitrator is a discretionary order. Such an exercise of discretion is not easily overturned: House v The King (1936) 55 CLR 499, and the appellant needs to identify the error of law involved.
With regard to the exercise of the discretion the respondent also relies upon s 264 being the section giving the discretion to the arbitrator on the question of costs. However the respondent also relies on s 264(5) and s 264(6) in the following terms:
(5)A dispute resolution authority is not to order the payment of costs by a worker unless the dispute resolution authority is satisfied that the costs relate to an application made by the worker that was frivolous or vexatious, fraudulent or made without proper justification.
(6)If a dispute resolution authority is satisfied that a part only of the application was frivolous or vexatious, fraudulent or made without proper justification, the dispute resolution authority may order the worker to pay the costs relating to that part of the application.
The respondent argues that the appellant in substance failed. She only succeeded on one item of expense to the value of $630 out of a claim of three items, the total of which was $2,400.
It is therefore argued that there should be no order as to costs.
It is said that the relevance of s 264(5) and s 264(6) is that absent those sections there may well have been an order in favour of the respondent against the worker in respect of those items of claim upon which the worker failed. That being the case it is said that the starting point should be no order as to costs because the appellant was unsuccessful to the extent of approximately three‑quarters of her claim.
It is also argued that these were discrete items. The material before the arbitrator comprised a number of documents which included a report from Dr Roger Lai dated 14 March 2014. In that report Dr Lai dealt separately with the question of the appellant using the gym and physiotherapy services. I can assume that when he refers to exercise therapy he is referring to gym work. In par 9 of his report he said:
Further physiotherapy or exercise will not offer any curative benefit. I would expect that with the number of physiotherapy sessions provided to date that she can be independent in her exercises. I note no objective improvement with exercise therapy over the last few years as noted in the Guardian report and that she remains on the same work restrictions and hours. In my view ongoing exercise is of general health maintenance benefit and not a required specific treatment at this stage of her chronic condition.
The doctor did not opine on the need for chiropractic treatment.
The evidence also included a report from her general practitioner, Dr Jasper Mahon, dated 31 August 2014. In that report the doctor noted that the appellant was no longer taking pain relief medication because she was trying to get pregnant. However she continued to perform her home/gym exercises and attended physiotherapy and osteopathy treatments. He went on to say, 'She does not, and will not, need any further form of treatment'. The doctor went on to note that the appellant continued to report extra symptomatic relief with her physiotherapy and osteopathy on top of that which she obtained with her home exercise programmes. He therefore recommended the ongoing treatment to help relieve her symptoms. However he went on to say they would not provide any further curative benefit.
The doctor's clinical notes were also part of the evidence before the arbitrator. Those notes included an assessment on 24 April 2014 in which it was noted that the appellant 'is trying osteopathy – aware will be at own expense'.
The respondent observes, correctly, that this appeal does not challenge the arbitrator's findings as to the need for the treatment, only the order as to costs.
It is said by the respondent that these were quite independent claims to expense which were dismissed for different reasons.
In his reasons the arbitrator analysed in detail the evidence before him. He observed the opinion of Dr Lai to which I have referred that no other treatment or therapy would offer any curative benefit or substantial durable improvement. He also noted that according to Dr Lai further physiotherapy or exercise would not offer any curative benefit.
He also noted, in an earlier report of 13 December 2011, that Dr Lai had noted that the appellant had had extensive exercise therapy over time and had an independent home exercise programme and was unlikely to derive additional benefit from further formal exercise programmes.
The arbitrator noted (at [10]) that on the basis of Dr Lai's report of 14 March 2014 Risk Cover had declined to authorise or pay for ongoing physiotherapy/Pilates, gym membership or osteopathic or chiropractic treatment. However the arbitrator did note that soon after issuing that report the appellant had become aware that she was pregnant with her child due in December 2014.
When analysing the evidence filed on behalf of the appellant the arbitrator noted that the appellant had claimed that in April 2014 when she saw Dr Mahon 'we thought that an osteopath may increase the rate in which I was recovering'. She said that she met the expense herself. As to the gym membership, she paid for this initially but stopped paying in June 2013. By then she was pregnant and did not attend the gym.
The arbitrator noted the claim of the respondent that there was no objective medical evidence to support the ongoing osteopathy, chiropractic, physiotherapy or Pilates treatment and no objective evidence that treatment is of beneficial effect. With regard to the gym membership he noted the submission that it was for the maintenance of the appellant's health generally and not a specific treatment for her workplace injury. The submission concluded that the medical evidence of Dr Lai did not support the treatment as being appropriate, effective and accepted by the medical specialists.
The appellant submitted that at no time had she acted unreasonably in incurring these expenses.
In his findings of fact, the arbitrator noted the subsequent pregnancy of the appellant and inferred that Dr Mahon considered it reasonable for her to cease or reduce the use of analgesics while pregnant and in consequence the amelioration of or reduction in her symptoms from analgesics would not occur and that the doctor appeared to accept that the appellant obtained some symptomatic relief from her home exercise programmes and extra relief from her physio, Pilates and/or osteopathy, chiropractic treatment.
Whilst the arbitrator accepted the appellant's pregnancy was a complicating factor in the claim, he preferred the opinion of Dr Lai and disallowed the claim for osteopathy/chiropractic treatment and further physiotherapy/Pilates, and gym fees from April 2014 were not necessary and not reasonably incurred. However he did find it was reasonable for the appellant to reduce her use of analgesics while pregnant and that physiotherapy/Pilates assisted and on that basis he would allow that claim. With regard to the other expenses he formed the view that they were initiated by the appellant and that Dr Mahon's role was little more than sanctioning. He observed them as an expense to be met by the appellant and the arbitrator took the same view.
With regard to the gym fees, he preferred the opinion of Dr Lai that home exercises were all that was needed to maintain an appropriate level of fitness.
It is on that analysis of the findings and the evidence that it appears that the respondent argues that the appellant failed on two out of three claims for expenses for differing reasons.
It is argued that the appellant pursued all three claims. In the circumstances of her having become pregnant had she conceded that only physiotherapy was necessary this might have been a case that could have been settled.
With regard to the adequacy of the arbitrator's reasons it was argued that when one reads the reasons as a whole one can then see why it is that the arbitrator came to the decision that he did, that she should only receive 50% of her legal costs. His reasons in [35] must be read in conjunction with the whole of the reasons to expose his reasoning.
Notwithstanding this, it was the respondent's argument that the starting point was that she should have received no order as to costs because she had substantially failed. The respondent maintained this argument notwithstanding the finding of the arbitrator in [35] that she had succeeded in her claim to a significant extent, albeit less than 50% of the quantum.

The legal principles

I propose to commence with what is required of the decision‑maker with regard to reasons.
It is well accept that the giving of reasons is a normal incident of the judicial process. Unless a party knows the basis of the decision the losing party cannot know whether there has been a mistake of law or fact. Fairness therefore requires that a party should know why they have won or lost: Mount Lawley Pty Ltd v Planning Commission (WA) [2004] WASCA 149, 26 – 27.
It is also well established that reasons do not have to be lengthy or elaborate (Beale v GIO of NSW (1997) 48 NSWLR 430, 443) but the reasoning process leading to the result must be disclosed with sufficient certainty to achieve those ends. If no reasons are given an appeal court will intervene or if the reasons are so inadequate as to give rise to a miscarriage of justice: Mount Lawley (29).
It is also clear that in assessing the adequacy of reasons the reasons must be read as a whole and regard must be had to findings which may be inferred: Beale (443).
It appears to me on first glance that [35] does not of itself expose the reasoning of the arbitrator as to why he has only allowed 50% of the appellant's costs.
It appears quite clear from the material before the court that the appellant had made a claim for the injury she sustained at work on 23 June 2009 in which she developed low back pain after transferring a heavy patient on the ward. The claim to expenses appears to have been, what can only be described as, a rolled up claim for reasonable expenses incurred and comprising these three items claimed. That being the case the arbitrator did not in [35] identify what it was about the rolled up claim that would deprive the appellant of all of her costs.
However that is not the end of the matter because it is necessary to look at his determination in this regard by having regard to his other findings and the whole of his reasoning process. When one carries out that process it becomes quite clear that the position appeared to be that none of these expenses were reasonably incurred up to a particular point. It was only when the appellant became pregnant and ceased using medication to alleviate her pain and commenced using physiotherapy that the arbitrator thought that was a reasonable step to take. Accordingly, I infer from a reading of the reasons that the learned arbitrator was of the view that that was all that was open to the appellant at that time and not the other claims for gym, exercise and chiropractic treatment for which there was no supportive evidence.
It is speculative to consider whether or not, had the appellant merely proceeded on that basis, the claim might have settled. One would like to think that that would be the case given that the amounts were so modest.
I am of the view that there is sufficient in the arbitrator's reasoning to show why he reached the conclusion on costs that he did.
That being the case the appellant's arguments to support the grant of leave on the grounds that inadequate reasons have been provided must fail.
I now turn to the exercise of the discretion.
It is clear from s 264(1) that costs are in the discretion of the relevant dispute resolution authority (the arbitrator).
I do not accept the respondent's submission that s 264(5) and s 264(6) assist. These sections merely deal with the payment of costs by a worker. Such costs are only to be ordered if the claim or part thereof was one found to be made by the worker that was frivolous or vexatious, fraudulent or made without proper justification. In the present case there is no such finding.
In my view those subsections would not give rise to any inference that, but for them, costs would be awarded in favour of the respondent. In my view one would turn to normal principles for the exercise of a discretion to award costs against a claimant where the claimant has failed or failed on a particular issue. It is only if that might produce an award against the claimant that the subsection comes into play.
Further, I do not accept that those subsections assist in the argument that the starting point in the present case should be that the appellant should receive no costs because she was largely unsuccessful. To some extent that flies in the face of the finding of the arbitrator that she had succeeded to a significant extent.
Returning to the discretion, it is clear that it is necessary to show an error in the exercise of a judicial discretion to trigger the appellate court's jurisdiction. An appellate court will not simply substitute its opinion if it thinks another outcome on the discretion was open to the court at first instance and might have been so ordered. It is not enough that the appellate tribunal would consider that, if it had been in a position of the primary judge, it would have taken a different course. It must appear that some error has been made in the exercise of the discretion. If a judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he makes mistakes of facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate tribunal may exercise its own discretion in substitution for his if it has the materials to do so: House v The King (504 ‑ 505). It was also noted in that case that it may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law opposes in the court of first instance. In that case the exercise of the discretion is reviewed on the grounds that a substantial wrong has in fact occurred.

As I have noted, it is argued on behalf of the appellant that the general principles as to costs apply, that is to say that they follow the event with the successful party recovering his or her costs in the absence of special circumstances justifying some other order. It is argued that the appellant was required to bring the application because the respondent disputed the application in its entirety and therefore the appellant should be fully indemnified in respect of costs.
In Oshlack (66) McHugh J observed:
By far the most important factor which the courts have viewed as guiding the exercise of the costs discretion is the result of the litigation. A successful litigant is generally entitled to an award of costs. (citations omitted)
His Honour went on to say:
The combined force of the sentiments recognised above by Mason CJ regarding the need for consistency in order to avoid injustice, and by Devlin J, regarding the most significant factor affecting the cost discretion, provides the jurisprudential basis for the important principle commonly referred to as the 'usual order as to costs'.
At (67) his Honour said:
The expression the 'usual order as to costs' embodies the important principle that, subject to certain exception, a successful party in litigation is entitled to an award of costs in its favour.
On the subject of exceptions his Honour (at 69) adopted what was said by Devlin J in Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd [1951] 1 All ER 873, 874:
No doubt, the ordinary rule is that, where a plaintiff has been successful, he ought not to be deprived of his cost, or, at any rate, made to pay costs of the other side, unless he has been guilty of some sort of misconduct.
His Honour then went on to identify what was meant by misconduct.
Order 66 r 1(3) RSC provides that where a party though generally successful in an action has, by the introduction of some issue or issues on which he has failed, increased the costs the court may order such party to pay the costs of such issue or issues.
In Bowen v Alsanto Nominees Pty Ltd [2011] WASCA 39, the Court of Appeal noted that it was incumbent upon the unsuccessful party to satisfy the court that there are good reasons why it should not pay the other party's costs. In that case the court also noted (citations omitted) that the court may order a successful party to recover only a portion of its costs where that party has been unsuccessful in respect of certain discrete issues. However that should not be done as a matter of course. To attempt to isolate each issue and analyse it would be likely to add further uncertainty and complexity to the outcome of litigation.
The court also noted that whilst parties should be encouraged to consider carefully what matters they put in issue, justice may not be served if by too ready a resort to deciding questions of costs according to success on particular issues, parties were dissuaded by the risks of costs from canvassing all issues which might be material to the decision in the case.
Further on this issue McKay v Commission for Main Roads [2013] WASCA 135(S) and cases referred to therein.
It has been suggested by the respondent that had the appellant limited her claim to that claim for expense upon which she was successful, a settlement might have been achieved. That may be so but it is speculative. The arbitrator clearly was not of the view that that was a disentitling factor to the appellant receiving some award of costs.
Adopting the principles set out in O 66 r 1(3) the question arises whether or not the appellant should have been deprived of her costs because she had been unsuccessful on two of the three issues. It seems to me that they were not discrete issues in the strict sense of the word. They were all issues of expense that arose out of the injury that she sustained. They were all matters that were dealt with by the reviewing and treating doctors (albeit Dr Lai did not comment on the chiropractic treatment). It was a rolled up claim for reasonable treatment expenses that was made by the appellant.
There is no evidence to show that the failed issues have increased the costs in this case.
The respondent has not sought to justify the award by the arbitrator, indeed the respondent's position is that the discretion has miscarried by granting any costs. However there is no appeal in that regard.
The disposition of this matter is one that can and should in my opinion reflect the general rule that a successful party will be entitled to an order for costs as explained in Oshlack. In my view the conduct of the appellant by including the two claims upon which she failed is not such as to disentitle her to the usual order for costs. As I have noted, these were rolled up issues dealt with in the same materials as the claim upon which she was successful. There is no evidence before me, and I am not satisfied, that by including those claims the appellant has in any way increased the costs of the proceedings so that she should have been deprived of the costs of those proceedings. Because the respondent refused to pay all or any of the claims it became necessary for the appellant to commence the proceedings by way of arbitration in WorkCover WA.
In that case I am persuaded that the learned arbitrator did err in the exercise of his discretion. He appears to have based his decision, on a fair reading of his reasons, on the basis that the appellant only succeeded to part of her claim but which he described as being to a significant extent. Merely succeeding to part of the claim does not of itself disentitle a claimant to the costs of the proceedings. There has to be something more which has not been demonstrated in this case. That being so I am satisfied that the discretion reposed in the arbitrator has not been exercised according to the established principles, principally that the successful party should receive its costs there having been no satisfactory demonstration of conduct on the part of the appellant which ought to have disentitled her to those costs.

Conclusion

Accordingly, I would grant leave to appeal and allow the appeal and set aside the order whereby the arbitrator awarded the appellant 50% of her costs and substitute an order that the respondent do pay the appellant's legal costs and disbursements of and incidental to the WorkCover WA proceedings to be agreed or taxed.
I will hear the parties in respect of any other orders that may be required and costs.