Australia: Costs order made against a worker by an arbitrator at WorkCover WA upheld by WA District Court judge

Last Updated: 25 December 2016
Article by Ashley Crisp and Henrik Eklund

In this recent decision District Court Judge Stone refused an appeal from the decision of a WorkCover WA Arbitrator ordering the worker pay the employer's costs following the worker's application for the payment for medical expenses.

At the time of the Application for Conciliation the worker was seeking an order that the employer pay the worker's reasonable medical expenses arising out of an alleged psychological injury which was alleged to have resulted from a compensable physical injury.

In her initial decision the learned Arbitrator found that prior to the Application for Conciliation being filed the worker's lawyer had approached the insurer asking them to accept liability for the alleged stress injury. The request was made based on a referral letter to a psychiatrist provided by the worker's GP.

As the insurer did not admit liability for the alleged stress injury the worker's lawyer filed a matter for Conciliation.

The treatment expenses claimed by the worker consisted of appointments with a psychologist who was employed by the worker's vocational rehabilitation provider, as well as unspecified future appointments with a psychiatrist and travel and medication.

At the time of the Conciliation Conference the employer's insurer had already paid for the psychological counselling provided by the psychologist as part of the vocational rehabilitation. In her decision the Arbitrator found at the time the application was filed for Conciliation there were no basis for seeking an order for the payment of any medical expenses as none were in fact outstanding.

The application was the subject of Conciliation twice without resolution.

After the second Conciliation Conference the worker repaid the insurer the monies the insurer had already paid directly to the rehabilitation provided for the costs of the psychological counselling. The Arbitrator was not able to make a finding on why this was done.

The worker then proceeded to file an application for Arbitration.

In the worker's Application for Arbitration she sought a determination as to whether her medical, other and travelling expenses resulting from the psychological injury result from the compensable back injury. A schedule of expenses annexed to the application included appointments with a psychologist and future undefined appointments with a psychiatrist, undefined travel expenses and undefined medication expenses.

The employer lodged an application to have the worker's application struck out on the basis that the worker was seeking mere declaratory relief.

The worker lodged an application seeking leave to file various invoices which had not been provided to the employer prior to the lodgement of the Application for Arbitration.

During the second directions hearing the employer agreed to pay the claimed expenses totalling some $2,000 on a without prejudice basis.

Although the employer agreed to pay the expenses it disputed the worker's entitlement to costs and made an application for order that the worker pay its costs. The employer made a point that none of the invoices claimed had been provided to the employer until some days earlier.

Having considered various submissions, including an affidavit filed by the worker's lawyer the Arbitrator made an order that the worker pay the employer's costs.

In submissions filed by her lawyer the worker claimed $17,000 in costs and submitted that the settlement should be considered to be a win for the worker who should therefore be entitled to costs but the Arbitrator did not agree with this. The Arbitrator found that a without prejudice agreement was not the same thing as being successful at the arbitration.

In considering the character of the worker's application the Arbitrator noted that she was not able to make any orders as to "liability" per se. She noted that a finding about liability may translate into an order for compensation but a finding on liability alone does not amount to an order for compensation she could not make an order purely in relation to liability.

Further, she also noted that there is nothing in the Workers' Compensation and Injury Management Act 1981 which would allow an Arbitrator to determine the category of payments and nothing more.

The Arbitrator noted that to the extent that the applicant was seeking a determination as to liability of the respondent she was merely seeking a declaratory order. In considering the issue the Arbitrator noted that the rationale set out in Ede v Alcoa of Australia Limited CM-192/01 continues to apply. The expenses sought by the worker at Conciliation had already been paid and her Application for Conciliation only sought to re-categorise them. She also noted that the other expenses claimed were vague and not yet incurred, with the other matter being a question of liability only. She therefore found that there was no dispute between the parties at that stage and the Application for Conciliation should not have been brought.

As to the Application for Arbitration, the worker's lawyers submitted during the proceedings the accounts had not been put to the employer as he had assumed that insurer had denied liability and therefore would not pay. The Arbitrator noted that an assumption does not create a dispute and that a dispute occurs when a claim for an expense said to relate to a claim is denied. She noted that this had not occurred at any stage before the Arbitration Application had been lodged and therefore she said that it cannot be said that there was any dispute in relation to these expenses as the insurer had never had an opportunity to consider them, let alone dispute them.

In considering the employer's application for its costs the Arbitrator noted that an order can only be made against a worker if the Arbitrator is satisfied that the application was frivolous or vexatious or without proper justification pursuit provisions of sections 264 and 265 of the Act. She had formed the view that at Conciliation there was no dispute as defined in the Act. She also found that at the time of the filing of the Arbitration Application there was no dispute which could be resolved by an Arbitrator. She was therefore satisfied that both applications were made without proper justification. She says the way in which the expenses are categorised is "entirely academic" as Purtell v Westfield Whitford City C46-207 and on that basis she considered that an order can be made pursuant to 264(5) of the Act for the worker to pay the employers costs.

She also dismissed the worker's application to have her costs paid by the employer and noted that it would be an unusual situation where costs of $17,000 would be considered reasonable for a claim of $2,000, as such costs would offend the principle of proportionality as they are disproportions of financial value of the subject matter of the dispute.

The worker appealed the decision to the District Court.

The appeal was heard by DCJ Stone who refused leave to appeal and made an order for the worker to pay the employers costs.

The grounds of appeal were various and most of these grants were withdrawn by the worker during the hearing. The only issues which remained were whether the Arbitrator erred in by misconstruing the meaning of "without proper justification" under section 264(5) of the Act and whether the Arbitrator erred by finding that there was no dispute to be arbitrated.

Stone DCJ found there were no matters of law upon which leave should be granted and therefore the worker's appeal was dismissed. This decision has not been appealed by the worker.

This decision demonstrates workers may face costs implications if they fail to particularise the treatments expenses they are seeking prior to issuing WorkCover proceedings.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Ashley Crisp
Henrik Eklund
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