Zachary Khourey and Military Rehabilitation and Compensation Commission
[2010] AATA 434
•10 June 2010
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2010] AATA 434
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2008/2540
GENERAL ADMINISTRATIVE DIVISION ) Re Zachary Khourey Applicant
And
Military Rehabilitation and Compensation Commission
Respondent
DECISION
Tribunal Senior Member A K Britton
Dr M E C Thorpe, MemberDate10 June 2010
PlaceSydney
Decision The Respondent is to pay the Applicant’s costs as agreed or taxed.
....................[SGD]……..............
Senior Member
CATCHWORDS
WORKERS’ COMPENSATION – costs principles applicable to whether a decision is “more favourable” than reviewable decision – decision more favourable to claimant than reviewable decision – discretion to order that costs of proceeding be paid by the responsible authority
Safety, Rehabilitation and Compensation Act 1988 (Cth) — s 67(8)
Hughes v Western Australian Cricket Association (Inc.) & ors. (1986) ATPR 40-748
Cretazzo v Lombardi (1975) 13 SASR 4
Khourey and Military Rehabilitation and Compensation Commission [2010] AATA 302
Liu and Comcare [2004] AATA 617
Ortega and Comcare [2005] AATA 502
Boyd and Australian Postal Corporation [2005] AATA 823;
Morton and Comcare [2005] AATA 930
REASONS FOR DECISION
Senior Member A K Britton
Dr M E C Thorpe, Member1. These reasons concern an application for costs made by Mr Zachary Khourey against the respondent, the Military Rehabilitation and Compensation Commission. The Commission opposes the application.
2. The substantive decision to which this application relates is Khourey and Military Rehabilitation and Compensation Commission [2010] AATA 302 (28 April 2010). In that decision, we set aside the determination of the Commission that it was not liable under s 14 of the Safety, Rehabilitation and Compensation Act 1988 (Cth) (the Act) in respect of Mr Khourey’s “adjustment disorder with anxiety and depressed mood”. A decision was substituted that:
(i)The Commission is liable under s 14 of the Safety, Rehabilitation and Compensation Act 1988 (Cth) in respect of an injury, being a disease, namely “adjustment disorder with anxiety and depressed mood”; and
(ii)The Commission is not liable for the aggravation of that injury which occurred on or about June 2002.
3. The general rule in relation to costs in this jurisdiction is that parties to proceedings under Part VI of the Act shall bear their own costs: s 67(1). In these proceedings, the initiating application was made under s 64 of the Act, which is contained in Part VI. Section 67(8), however, grants the Tribunal a discretionary power to order that all or part of the costs incurred by the claimant shall be borne by the “responsible authority”, in certain circumstances. It provides:
Where, in any proceedings instituted by the claimant, the Administrative Appeals Tribunal makes a decision:
(a) varying a reviewable decision in a manner favourable to the claimant; or
(b) setting aside a reviewable decision and making a decision in substitution for the reviewable decision that is more favourable to the claimant than the reviewable decision;
the Tribunal may, subject to this section, order that the costs of those proceedings incurred by the claimant, or a part of those costs, shall be paid by the responsible authority.
4. The Commission contends that the power to award costs cannot be exercised as the substantive decision made by the Tribunal was not “more favourable” to Mr Khourey. In the alternative, it contends that the circumstances of the case do not warrant the exercise of the power to award costs. Not surprisingly, Mr Khourey does not agree.
The substantive decision
5. To put the party’s argument in context, it is necessary to sketch in some details about the substantive decision and the statutory provision the subject of that decision. The decision made by the Commission, the subject of Mr Khourey’s application for review, was to refuse to accept liability under s 14 of the Act. Section 14 creates a general liability for the payment of compensation to injured workers. As previously noted, a decision was substituted that the Commission was liable for the injury of “adjustment disorder with anxiety and depressed mood” suffered by Mr Khourey. We determined that Mr Khourey developed the condition at some point prior to September 2001. However we decided that the Commission was not liable for the aggravation of that condition which occurred in June 2002.
Was the decision “more favourable” to Mr Khourey?
6. A pre-condition to the exercise of the power to award costs is that the decision made by the Tribunal be “more favourable” to the claimant than the decision that was reviewed by the Tribunal: see s 67(8).
7. The Commission submits that the weight of evidence indicates that any impairment, incapacity or medical expenses incurred by Mr Khourey was attributable to the second purported “injury”, for which it is not liable. It contends, in short, that nothing flows from our decision that the Commission is liable for the first injury and therefore that decision cannot be characterised as “more favourable” to Mr Khourey.
8. The Commission’s contention that that decision was not “more favourable” to Mr Khourey is flawed for these reasons.
9. First, the issue we were required to determine was whether the Commission was liable under s 14 of the Act for the alleged injury, not whether compensation was payable. The relationship between s 14 and the so-called “adjectival” or compensatory provisions of the Act was discussed in Liu and Comcare [2004] AATA 617. The Tribunal (Justice G Downes, President; Mr R P Handley, Deputy President and Mr M D Allen, Senior Member) commented:
A positive determination under s 14 is a determination of the existence of a compensable injury. The nature and amount of the compensation is to be determined under other provisions of the Act. Compensable injuries may not always result in the payment of compensation. They may give rise to intermittent entitlements to compensation. There may be periods when there is no present entitlement to compensation under any of the sections of the Act relating to the nature and amount of compensation. … The compensable injury may never give rise to any future entitlement to compensation. But this cannot be known or determined in advance. No determination, whether by consent of the parties or not, can preclude the making of a future application for compensation with respect to a compensable injury determined to exist under s 14. This was made clear in Plumb v Comcare (1992) 39 FCR 236 at 240.
10. Second, to satisfy s 67(8) the Tribunal’s decision must be “more favourable to the claimant than the reviewable decision”. “Favourable” is defined by the Macquarie Dictionary, Fourth edition, to mean:
1. affording aid, advantage or convenience … 3. (of an answer) granting what is desired.
11. It is enough that that the Tribunal’s decision be more favourable to the claimant than that under review. There is no added requirement — as the Commission seems to suggest — that the claimant be successful in all substantive matters the subject of the reviewable decision. As a consequence of the Tribunal’s decision, Mr Khourey had an entitlement to compensation in respect of the first injury. Under the Commission’s decision he had no claim or entitlement to compensation. While his application for review was only partly successful, he was, nonetheless, afforded an advantage. That, in our view, is sufficient to characterise our decision as “more favourable”.
12. Third, we cannot accept the Commission’s assertion that it is plain from the evidence that that no relevant incapacity or impairment resulted from the first injury. Whether Mr Khourey will be successful in any future claim for compensation in respect of that injury is a matter for the decision-maker charged with the power to determine that claim. It would be inappropriate for us to speculate about what decision might be reached at some future date by another decision-maker who may have the benefit of additional information on particular aspects of incapacity or impairment that was not before us in these proceedings.
13. As we are satisfied that our decision was more favourable to Mr Khourey than the decision under review, it follows that the power to award costs under s 67(8) can be exercised.
Should the power to award costs be exercised?
14. The Commission contends that the power to award costs should not be exercised in this case. In the alternative, it argues that the Tribunal should order that it only pay some of the costs incurred by Mr Khourey.
15. The Act provides no express guidance on the factors to be taken into account when deciding whether some or all of the costs of the claimant should be paid by the respondent. While it is not possible to draw up an exhaustive list of factors that might be relevant to the exercise of the power to award costs, it seems to us that, as starting point, the following factors may be relevant, depending on the circumstances of the case:
(i)the manner in which the claimant has conducted the proceedings, in particular whether the proceedings were vexatious;
(ii)whether the claimant has been responsible for prolonging unreasonably the time taken to complete the proceeding;
(iii)whether a reasonable offer of settlement was made by the respondent;
(iv)whether the claim could be described as hopeless or untenable;
(v)whether the claim for compensation was only successful in part.
16. There is no suggestion that Mr Khourey’s conduct of the proceedings was vexatious or resulted in the proceedings being prolonged or the Commission incurring unnecessary costs. Nor is it suggested that his claim was untenable in fact or law.
17. The Commission has taken us to a number of decisions of the Tribunal (differently constituted) where it was decided not to award costs to a claimant notwithstanding that they had been at least “technically successful”: Ortega and Comcare [2005] AATA 502; Boyd and Australian Postal Corporation [2005] AATA 823; Morton and Comcare [2005] AATA 930. In our view, none of these decisions are especially helpful. None expressly consider the distinction between the pre-condition to the exercise of the power to award costs and the factors relevant to the exercise of that power. Moreover, it appears that the claimant in some of these decisions failed to establish the threshold issue — the existence of a more favourable decision — rendering the issue of discretion nugatory. In any event, other decisions relating to costs can only provide an indication of the kinds of circumstances that may attract a costs order. While trite, it is important to bear in mind that each case will turn on its particular facts and the discretion to award costs cannot be fettered by the approach taken in different cases.
18. While the decision was more favourable to Mr Khourey, his claim was nonetheless only partially successful. While not determinative, this in our view is a relevant consideration in determining whether the power to award some or all of Mr Khourey’s costs should be exercised.
19. The Commission urges us to adopt the approach taken by Toohey J in Hughes v Western Australian Cricket Association (Inc.) & ors. (1986) ATPR 40-748 which his Honour ordered that the respondent pay 75% of the costs of the applicant. His Honour identified as one of the guiding principles in the exercise of the discretionary power to award costs under the Federal Court of Australia Act 1976, as being that where a litigant has succeeded in only a portion of their claim, the circumstances may make it reasonable that he bear the expenses of litigating that portion upon which he has failed. His Honour went on to refer to the “note of cautious disapproval” expressed by Jacobs J in Cretazzo v Lombardi (1975) 13 SASR 4 at 16 of applications to apportion costs according to the success or failure of a party on various issues at trial:
But trials occur daily in which the party, who in the end is wholly or substantially successful, nevertheless fails along the way on particular issues of fact or law. The ultimate ends of justice may not be served if a party is dissuaded by the risk of costs from canvassing all issues, however doubtful, which might be material to the decision of the case. There are, of course, many factors affecting the exercise of the discretion as to costs in each case, including in particular, the severability of the issues, and no two cases are alike. I wish merely to lend no encouragement to any suggestion that a party against whom the judgment goes ought nevertheless to anticipate a favourable exercise of the judicial discretion as to costs in respect of issues upon which he may have succeeded, based merely on his success in those particular issues.
20. His Honour considered the proportion of time at hearing spent on evidence and submissions relating to those issues on which the applicant failed was relevant but not determinative. He recognised that this could be extremely difficult to calculate.
21. The issues confronting Toohey J in Hughes are different from those raised these proceedings. First, these proceedings are in the nature of a review of a reviewable decision, and the issues to be determined were not defined by any cause of action “pleaded” by Mr Khourey. Second, it is not possible to neatly dissect those matters relevant to the Commission’s liability in respect of the first injury as opposed to the aggravation injury. Here there was conflicting medical evidence about a range of matters including whether Mr Khourey suffered from a psychiatric condition at all and, if so, when it developed and the link, if any, between it and his employment with the Commission. There was also legal argument about whether any “excluded causes” contributed to Mr Khourey’s condition. These factual and legal issues were intertwined.
22. While a powerful argument may be made that where a claimant only partially succeeds in their application for review consideration should be given to awarding only part of their costs, we have decided not to apportion costs in this case. In reaching that decision, we consider the following to be relevant. First, the factual and legal issues that underpinned the two parts of our ultimate decision — that the Commission was liable for the first but not the aggravation injury — could not be neatly dissected. Second, our finding that there had been an aggravation injury turned on complex and competing medical evidence not easily severable across the two related parts of the decision. Third, Mr Khourey’s contention that the Commission was liable for that injury could not be described as hopeless. Fourth, there is no suggestion that Mr Khourey’s conduct of the proceedings resulted in them becoming protracted or the Commission incurring unnecessary costs. Fifth, consistent with the concern expressed by Jacobs J in Cretazzo, we are mindful of the “chilling effect” a partial cost order might have on claimants in this jurisdiction.
23. For these reasons we have decided to exercise our power to order that Mr Khourey’s costs be paid by the Commission.
I certify that the 23 preceding paragraphs are a true copy of the reasons for the decision herein of Ms A K Britton, Senior Member, and Dr M E C Thorpe, Member.
Signed: .....................................[SGD]......................................
Associate to Senior Member BrittonDate of Hearing on Costs: 31 May 2010
Date of Decision: 10 June 2010
Representative for the Applicant: Mr M Vincent
Representative for the Respondent: Mr B Kelly
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