Drew, Sharon --- "Costs column: Comcare proceedings and costs orders in the AAT" [2019] PrecedentAULA 12; (2019) 150 Precedent 46

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COMCARE PROCEEDINGS AND COSTS ORDERS IN THE AAT

By Sharon Drew

The power of the Administrative Appeals Tribunal (AAT) to award costs in Comcare proceedings is provided at s67 of the Safety, Rehabilitation and Compensation Act 1988 (Cth) (SRC Act). The default position set out in sub-s67(1) is that each party pays its own costs.

However, if the claimant has applied for a review and the AAT varies the decision in a manner favourable to the claimant, or sets aside the decision, making a decision more favourable to the claimant, the AAT may order Comcare to pay all or part of the claimant’s costs. The AAT can take into account a range of matters including whether the claimant has incurred unnecessary costs, or caused Comcare to incur unnecessary costs.

Section 67 of the SRC Act provides the AAT with a ‘largely unfettered’ discretion to alter the default position that each party pays its own costs of proceedings: Perry v Comcare.^[1] The Court in Perry stated at [90]:

‘The fundamental obligation of the Tribunal in the exercise of the discretion was to do justice between the parties according to its assessment of the circumstances of the case’.

The Tribunal’s discretion includes taking into consideration ‘realistic’ offers of settlement. In Rutter and Linfox Australia Pty Ltd (Compensation) [2017] AATA 780, the respondent relied on various offers including an offer based on 13 per cent whole person impairment (WPI) which was stated to be conditional on the claimant agreeing not to seek compensation for treatment expenses. The Tribunal found that the claimant had sustained permanent impairment of 13 per cent WPI and affirmed the respondent’s decision that the claimant had no present entitlement to treatment expenses. However, the Tribunal held that the respondent’s offers were ‘contingent offers and inconsistent with the position ultimately taken by the respondent at hearing’, and were not reasonable in the circumstances (at [22-23]).

The Tribunal may also consider apportionment between proceedings or discrete issues in proceedings. For example, in Scicluna and Australian Postal Corporation (Compensation) [2018] AATA 3973 where the respondent argued that in order for the Tribunal’s discretion to be exercised in favour of a claimant, proceedings ‘ought to be conducted in a way that fairly and properly justifies an order for costs being met by the respondent’. In that matter, the claimant had commenced three separate applications, withdrawing one of them at the commencement of hearing and a second while the matter was part-heard. The respondent argued that the claimant ought to be entitled to no more than one-third of his costs of the proceedings.

The Tribunal stated at [13] that:

‘The Tribunal does not accept as a matter of principle that a successful applicant in a matter before this Tribunal, should be denied costs in an application following a backward-looking exercise of assessing whether there was a point in time during the progression of their matter that it could be said that their evidence did not stack up sufficiently to enable them to satisfy the Tribunal that he or she had, at all times during the course of the application, met the standard of reasonable prospects of success. This imposes an onerous requirement on s67(8) of the Act which this provision does not expressly call for. Further, the Tribunal does not consider it appropriate to impose any such requirement on s67(8), given that an application for costs under this provision will arise, in almost all cases, where the person has been successful in establishing an entitlement to compensation for a work-related injury.’

However, the Tribunal disallowed the claimant’s costs incurred as a result of an adjourned hearing due to the unavailability of an expert witness, noting that ‘The Tribunal has in place a structured process for the submission by each party to an application for review, of hearing certificates prompting due inquiries to be made by them about the availability of all medical witnesses to be called to give oral evidence at the hearing’ (at [21]).

The Tribunal may also take into consideration the conduct of the claims process. Recent examples include Wilson and K & S Freighters Pty Ltd (Compensation) [2018] AATA 464, where the Tribunal found that the arguments raised by the respondent ‘lacked legal and factual basis’ and that facts to support its main argument ‘were simply non-existent’. The Tribunal concluded that ‘little effort had been made by the respondent to establish or verify the facts upon which its primary argument was based’ (at [91]) and ordered costs in favour of the claimant.

In the matter of Koker and Comcare (Compensation) [2017] AATA 1432, Comcare made incapacity payments to the claimant for a period of approximately eight months, during which period he was advised by his employer to remain off work. Following the claimant’s return to work, Comcare reconsidered its decision and determined that the claimant was entitled to a lesser amount in compensation and sought to recover payments totalling approximately $25,000. There was no suggestion that the claimant had been dishonest; there was no fresh evidence prompting Comcare’s reconsideration; the claimant had repeatedly sought to return to work. While the Tribunal affirmed Comcare’s reconsideration reducing the claimant’s payments by approximately $10,000, Comcare’s actions were described as ‘unethical tactics’ by the Tribunal. This seems to have been a factor in the Tribunal ordering Comcare to pay the claimant’s costs of the proceedings.

If the AAT sets aside a decision and remits the case for redetermination, Comcare must pay the claimant’s costs.

In certain circumstances, where the claimant has withheld information or documents, a costs order cannot be made.

If Comcare has applied for review of a decision under the SRC Act, the AAT may award costs to the claimant.

If costs are allowed, the claimant will generally be entitled to witness expenses at the prescribed rate, reasonable and proper disbursements including counsel fees, fees for expert and medical reports and photocopying, and professional fees calculated at 75 per cent of the costs allowed under Schedule 3 of the Federal Court Rules 2011. The procedure for taxation of costs is similar to the process in the Federal Court of Australia, and is detailed in the AAT’s Practice Direction, ‘Taxation of Costs’.

If an application for review to the AAT is aborted because Comcare has reconsidered the determination, Comcare will usually be liable to reimburse the claimant for costs reasonably incurred in connection with the application. However, the AAT has no power to tax costs payable in those circumstances.^[2]

There is no provision for Comcare to recover costs from an unsuccessful claimant in proceedings before the AAT; however, adverse costs orders may be made on appeal to the Federal Court.

Sharon Drew is Principal of Blue Ribbon Legal – specialising in legal costs disputes. PHONE [phone] EMAIL [e-mail] WEB www.blueribbonlegal.com.au.

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^[1] [2006] FCA 33.

^[2] Terese Greczanik and Australian Postal Corporation [1994] AATA 160.