Madex v VWA [2023] VCC 1972 (1 November 2023)

Last Updated: 2 November 2023

IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMON LAW DIVISION	Revised Not Restricted Suitable for Publication
SERIOUS INJURY LIST

Case No. CI-23-01423

JESSICA MADEX	Plaintiff
v
VICTORIAN WORKCOVER AUTHORITY	Defendant

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JUDGE:	HER HONOUR JUDGE TSIKARIS
WHERE HELD:	Melbourne
DATE OF HEARING:	9 October 2023
DATE OF JUDGMENT:	1 November 2023
CASE MAY BE CITED AS:	Madex v VWA
MEDIUM NEUTRAL CITATION:	[2023] VCC 1972

REASONS FOR RULING
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Subject: COSTS

Catchwords: Plaintiff was seeking leave to bring a common law proceeding for both pain and suffering and pecuniary loss damages – defendant served a Notice authorised by the WorkCover (Litigated Claims) Legal Costs Order 2016– Notice offering a pain and suffering certificate only – proceeding listed for hearing – proceeding settled for the granting of a pain and suffering certificate only – whether the plaintiff is entitled for certification of counsels’ fees in the circumstances

Legislation Cited: Workplace Injury Rehabilitation and Compensation Act 2013; WorkCover (Litigated Claims) Legal Costs Order 2016; Civil Procedure Act 2010; County Court Act 1958

Cases Cited: Matthews v La Trobe Regional Hospital [2021] VCC 1161; Gellard v Victorian WorkCover Authority [2017] VCC 1919; Oldaker v Currington [1987] VicRp 61; [1987] VR 712; Barman v Victorian WorkCover Authority (Ruling as to Costs) [2020] VCC 380; Traumanis v State of Victoria (Unreported), VCC, 26 May 2017; Dowling v Myers Street Family Medical Practice Pty Ltd (Ruling as to Costs) [2018] VCC 2314; Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298; (2005) 13 VR 435; Calderbank v Calberbank [1975] 3 All ER 333; Grech v Victorian WorkCover Authority (Ruling as to Costs) [2020] VCC 968; Conway v Victorian WorkCover Authority (Ruling as to Costs) [2021] VCC 1197; Condron v Victorian WorkCover Authority (Ruling as to Costs) [2021] VCC 183

Ruling: The plaintiff is entitled to the certification of counsel’s fees.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Ms M Pilipasidis KC with Ms C Willshire	Zaparas Lawyers
For the Defendant	Mr Bruce Mc Kenzie	Russell Kennedy

HER HONOUR:

Introduction

1. Jessica Madex, the plaintiff in this proceeding, issued an Originating Motion, on 3 April 2023, seeking a determination that she had suffered a “serious injury” to her spine and/or a permanent severe mental or behavioural disturbance or disorder and that she be given leave to bring a claim for common law damages for both pain and suffering and pecuniary loss.
2. The proceeding was resolved on 9 October 2023, the day it was fixed for hearing. The plaintiff agreed to accept a serious injury certificate permitting her to claim damages for pain and suffering only and she abandoned her application in respect of pecuniary loss.
3. The defendant served a Notice (“the Notice) on the plaintiff on 8 May 2023, pursuant to the provisions of the WorkCover (Litigated Claims) Legal Costs Order 2016 (“the Costs Order”), outlining its offer to compromise the proceeding by granting a pain and suffering certificate only. The offer was rejected and the defendant submitted the Court ought not certify counsels’ fees. It was submitted on behalf of the plaintiff that it was reasonable for the plaintiff to reject the offer at the time.
4. The only issue in dispute is whether the plaintiff is entitled to certification of Counsel’s fees.

Factual background

5. The following facts have derived from the parties’ Court Books and the parties’ submissions.
6. The plaintiff is a 38 year-old^[1] woman who lives with her ex- partner and two dependent children.
7. After leaving school part way through year 9, she worked in a variety of jobs. She had some time out of the work force as she battled drug and alcohol addiction and mental health issues. After undergoing detox and therapy she ceased using and she has not used any illicit drugs since September 2015. She commenced working with the employer in 2018 as a Merchandiser and Sales Representative. She suffered injury to her back in the course of her employment on or about 31 December 2019.
8. The plaintiff’s initial application under Division 2 of Part 7 of the Workplace Injury Rehabilitation and Compensation Act 2013 (“the Act”) dated 16 November 2022 was for pain and suffering only.^[2]
9. The plaintiff sought to amend the application by correspondence dated 22 February 2023 to include a claim for economic loss. The Victorian WorkCover Authority (“VWA”) agreed to the amendment in correspondence dated 27 February 2023. The VWA subsequently gave notice to the plaintiff of its determination pursuant to s335(2)(c) of the Act that she had not suffered “serious injury”.
10. The plaintiff filed an Originating Motion on 30 March 2023 seeking leave of the Court to pursue a common law damages claim in respect of injury to the spine and/or permanent severe mental or permanent severe behavioural disturbance or disorder; sustained throughout the course of her employment for both pain and suffering and pecuniary loss damages.^[3]
11. By order of His Honour Judge Pillay made on 27 April 2023, the plaintiff’s Originating Motion was listed for hearing on 9 October 2023.
12. On 9 May 2023, the solicitors for the VWA served on the solicitors for the plaintiff a Notice pursuant to s4, Part A, of the Costs Order. The Notice was for the purpose of advising the plaintiff that the VWA was satisfied that she was entitled to pursue damages for pain and suffering, but that the VWA maintained its denial of her application for a serious injury certificate for pecuniary loss.
13. The plaintiff’s solicitors briefed Counsel (both Senior Counsel and Junior Counsel) on or about 7 June 2023. Counsel conferred with the plaintiff on 6 October 2023.
14. On 9 October 2023, prior to the commencement of the hearing, the parties resolved the plaintiff’s application on the basis that the plaintiff would be granted a serious injury certificate for pain and suffering only and abandoning the application in respect of pecuniary loss.

Relevant legal principles

15. The WorkCover (Litigated Claims) Legal Costs Order 2016 specifies the professional costs that may be paid by the Authority or the self-insurer to a legal practitioner acting on behalf of the worker and the disbursements that may be paid to a worker or legal practitioner acting on behalf of a worker in respect of any claim or proceeding pursuant to s352(2)(d) of the Act. It replaces any other entitlement of a worker or a legal practitioner to be awarded legal practitioners’ professional costs and disbursements payable by the Authority or a self-insurer incidental for and incidental to a proceeding under s335(2) of the Act, and has full force and effect, notwithstanding anything to the contrary in the Legal Profession Uniform Law Application Act 2014, the Supreme Court Act 1986 or the County Court Act 1958, or in any regulations, rules or other documents made under any of those Acts.
16. Relevantly, Part A2 provides:

“...

If:

(i) the Authority or a self-insurer gives Notice (the Notice) in writing to the worker’s legal practitioner that the Authority or the self-insurer is satisfied that a worker’s injury satisfies requirements ... section 325(2)(b)(i) of the WIRC Act but not the requirements of ... section 325(2)(b)(ii) of the WIRC Act, and that subject to the worker abandoning that part of the application seeking the leave of the Court to bring damages proceedings for pecuniary loss damages, the Authority or self-insurer will issue a certificate (‘the offer’); and

(ii) within 28 days of receiving the Notice the worker or the worker’s legal practitioner does not advise the Authority or the self-insurer that the worker accepts the offer; and

(iii) at the time of resolution, whether as a result of a certificate provided by the Authority or the self-insurer or as a result of leave being given by the Court, the worker is entitled to bring a damages proceeding for the recovery of pain and suffering damages but not for the recovery of pecuniary loss damages,

the costs payable is the sum in Table A1, payable at the time the Authority or the self-insurer made the offer in writing to the worker or the worker’s legal practitioner.

... .”

17. Parts B and C of Section 4 provide that in addition to the sum specified in Part A, the worker or worker’s legal practitioner shall be entitled to be paid as a disbursement in respect of various matters. Subparagraph 5 of Part B, and Part C, state such a disbursement includes:

“5. the cost of counsel’s fees (including brief fee) incurred not more than 28 days prior to day 1 of the hearing. The counsel fees payable will be calculated in accordance with the Scale of Costs or any other sum which is agreed or ordered by the Court;

6. 6. ...

Part C.

In respect of an item in Part B, if a dispute arises in relation to the allowance of an item claimed or the reasonable cost of the item, the County Court Rules of Civil Procedure will apply to the dispute resolution process.”

General discussion

18. I was provided with a number of rulings from this Court as to the application of the Legal Costs Order relating to the certification of counsel’s fees in circumstances where the plaintiff has not accepted an offer made by the VWA in a Notice.
19. His Honour Judge Carmody in Traumanis v State of Victoria stated “the scheme is set up to encourage early settlement of serious injury applications”.^[4]
20. His Honour Judge Coish in Dowling v Myers Street Family Medical Practice Pty Ltd stated that the policy underlying the Legal Costs Order and this notice is to manage legal costs and encourage resolution of disputes.^[5]
21. In Barman v Victorian WorkCover Authority (Ruling as to Costs),^[6] His Honour Judge Lauritsen on 8 April 2020 also stated that the purpose of offers of compromise or settlement is to bring litigation to an end sooner than would be the case if a trial occurred. They are meant to save costs for the litigants and the public.
22. His Honour Judge Parish in Mathews v Latrobe Regional Hospital also observed that “it must be borne in mind that in civil litigation, the purposes of offers of compromise or settlement is to bring litigation to an end sooner than would be the case if a trial occurred. They are meant to save costs, both for the litigant and the public”.^[7]
23. It is clear that one of the purposes of the LCO is to encourage early resolution of applications for serious injury and ensure legal costs and disbursements are reasonable.
24. As there is a dispute in respect of Counsel’s fees (an item in Part B), the County Court Rules of Civil Procedure will apply to the dispute resolution process (pursuant to Part C). I have a discretion in respect of the certification of counsel’s fees.
25. The question is, what is the test and what are the factors that should be taken into account in exercising the discretion?
26. His Honour Judge Parrish reviewed the various rulings in this Court,^[8] and concluded “that the issue for determination can be stated to be whether the plaintiff’s solicitors acted unreasonably in not accepting the offer ...It was incumbent upon the solicitors for the plaintiff to assess the material that was available to them at the time that the offer was made, bearing in mind that there was 28 days to accept the offer. Such assessment required an examination of the material available to the plaintiff’s solicitors, such material including, of course, the plaintiff’s instructions, together with other material including medical material relevant particularly to the issue of capacity for work. Furthermore, such assessment of the material must be in the context of what the worker must establish as a matter of probability in order to obtain leave to bring a claim for damages in respect of pecuniary loss – that is, at the time of the hearing, she would have to establish a loss of earning capacity of 40 per cent or more as set out in the Act and thereafter, to continue permanently to have a loss of earning capacity which would be productive of a financial loss of 40 per cent or more”.^[9]

Discussion

27. At the time the Notice was served, the solicitor for the plaintiff had arranged for the plaintiff to be examined by Dr Sheard (orthopaedic surgeon), Dr Ingram (Psychiatrist), Dr Awad (occupational physician) and had requested updated reports in particular from the plaintiff’s treating psychiatrist Dr Singh.
28. It was submitted by the plaintiff that the decision not to accept the pain and suffering certificate at that stage was reasonable in the circumstances as she was not working, she was having ongoing treatment for her back and she was suffering from psychiatric issues. When the offer contained in the Notice was rejected, the plaintiff was in possession of a medical report from Dr Kilner Brasier, dated 19 May 2022, whose specialty lies in Occupational and Environmental Medicine, that she had no current work capacity.^[10]
29. Reports were subsequently received from the medico legal examiners. Dr Sheard concluded the main reason that the plaintiff had left work more recently was due to her mental health and pregnancy as opposed to her back pain. In terms of back pain, he thought she would be able to undertake some duties.^[11]
30. Dr Ingram observed that the plaintiff had a very complicated past history and had previously had significant psychiatric issues related to an abusive childhood, physical and sexual abuse in various relationships and drug and alcohol dependence.^[12] She had been stable in the four years prior to her back injury but following the injury had become significantly anxious again. Her psychiatric prognosis was uncertain, given the significant past history of psychiatric problems, though he considered there was some underlying resilience and with treatment he hoped there may be further improvement. He did not feel she could work in any capacity at the time of his examination because of her depression and anxiety but in six months or so she would be able to return to part-time work, initially working from home.
31. Dr Awad considered a number of positions in the vocational report and felt she has capacity up to 25 hours per week in a sedentary role.^[13] It was submitted that based on the calculations of 25 hours, she would be able to meet the threshold.
32. The position changed with the receipt of Dr Singh’s report dated 25 September 2023. In reviewing her capacity for work he observed that the plaintiff needed an occupational therapist to assess her physical capacity and once her physical capacity was better she would start feeling better psychologically.^[14] He was not sure that she had a permanent incapacity to work. This opinion it was submitted, no longer justified pursing a pecuniary loss claim in the circumstances. The plaintiff had worked full time between July 2021 and June 2022. She then worked about 25 hours a week or thereabouts with Frontline in January and February 2023 . She then was unable to work due to a deterioration of her psychiatric state. Her mental state was what precluded her from working and the treating psychiatrist was of the view this was not permanent. It was submitted on behalf of the plaintiff that when counsel became involved, they took the view that the plaintiff should accept a pain and suffering certificate, if that offer was reinstated.
33. The defendant submitted that pecuniary loss was always a live issue in this case.^[15] Mr McKenzie provided the Court with his statement of calculations in respect of pecuniary loss and given the plaintiff’s without injury earnings were always a modest proposition, even based on figures suggested by the plaintiff’s camp, she would not likely satisfy the threshold. The plaintiff had demonstrated a significant retained capacity to earn significant sums as borne out in her taxation returns. The demonstrated capacity was relevant to the way in which the plaintiff’s decision making was to be considered. He referred the Court to a number of placement reports completed by AMS Consulting Group (Aust) Pty Ltd, particularly the one dated 29 September 2021,^[16] in which she confirmed that she was enjoying her role after commencing work on 1 July 2021. She ultimately ceased that work according to the defendant because she was pregnant, and her daughter was born in February 2022. There was a demonstrated capacity squarely being raised by an analysis of the plaintiff’s taxation returns and the defendant relied on the plaintiff’s own summary of the taxation returns for the purposes of without injury earnings. The plaintiff also had plans to study, and this was not disclosed in her affidavits which was unsatisfactory as it clearly impacted on her employment capacity.

Conclusion

34. I consider that a reasonable solicitor confronted with the Notice served on them by the defendant would require the solicitor to exercise their judgment in determining whether the evidence at the time the Notice was served, enabled them to make such a serious decision within the time contemplated by the offer. The plaintiff in abandoning the claim for loss of earning capacity, would abandon any right to common law damages permanently. The plaintiff can only make one application.
35. His Honour Judge Misso in Condron v Victorian WorkCover Authority (Ruling as to Costs),^[17] wherein his Honour stated, by way of obiter dicta:

“I think the purpose of the Costs Order is to avoid a plaintiff being made a reasonable offer of a pain and suffering certificate, and then simply blithely pressing on, and then accepting the very offer which was made earlier. The costs penalty must then apply; however, that does not mean that there may not be some extenuating circumstances which may operate against the plaintiff suffering the costs penalty.”^[18]

36. His Honour Judge Misso makes it clear that not accepting the offer which was made earlier does not necessarily mean that the cost penalty in relation to counsel’s fees applies.
37. The test is what a reasonable solicitor would do when confronted with a Notice and making a decision as to whether or not the offer should be accepted within the 28 days. This involves a consideration of the instructions of the plaintiff, the various material available to the plaintiff’s solicitor – particularly the medical material.
38. I do not believe that the plaintiff’s solicitor was in possession of all the relevant medical and vocational evidence to properly assess whether to accept the offer contained in the Notice at the time it was made.
39. The parties did not agree on the “without injury earnings” and it would have been a contest as to whether the plaintiff established the requisite loss. The defendant’s calculation of per annum earnings which “most fairly reflects” the plaintiff’s earnings was determined with reference to the 2018/2019 financial year. The plaintiff maintained that this figure did not include allowances of approximately $11,000. If this amount was taken into account, the plaintiff submitted that it would result in the plaintiff meeting the requisite threshold of greater than 40% loss, based on her retained capacity, although I note that I was not provided with specific figures in relation to this.
40. It is clear that before her injury the plaintiff was capable of working full time hours. The available medical reports confirm that she would be unable to return to pre injury hours and duties. At the time that the Notice was served, the plaintiff’s solicitor had in her possession a report from Dr Brasier that she had very limited capacity. The plaintiff had had a short-lived return to work in January and February 2023 but she had deposed that she struggled in that work primarily because of her mental health although her back pain was also a factor. In addition to being under the management of Dr Singh, she also saw psychiatrist Dr Hannah Kim in late 2022 and early 2023 at St Vincent’s Hospital. Dr Kim noted in her report dated 23 February 2023 that in the context of a history of generalised anxiety disorder, PTSD and a back injury sustained at work in 2019, the plaintiff’s mental health had continued to deteriorate.
41. The plaintiff’s solicitor did not sit on the Notice when it was made. The evidence in their possession at the time warranted the application for pecuniary loss be maintained as she had evidence in her possession to support a significantly reduced capacity. The plaintiff’s solicitors had at that stage arranged a number of medico- legal appointments and updated reports from treating doctors. It was in my view entirely reasonable to await receipt of those reports before giving proper consideration to abandoning pecuniary loss. Moreover the figures relied on by the defendant in its statement of calculations, to support its submission that the plaintiff would exceed the 60% threshold of without injury earnings, were contained in a report of Recovre, dated 14 July 2023.^[19] This report was received at least two months after the VWA served the Notice. At the time it served the Notice, it did not have in its possession all the evidence it claimed would defeat the plaintiff’s application for pecuniary loss.
42. It was only when the report from Dr Singh was made available, that it was clear that the application for pecuniary loss was not maintainable, and the plaintiff’s representatives were able to give proper consideration as to whether it was reasonable or not to maintain that aspect of the claim.
43. In the circumstances, I accept that the non-acceptance of the offer was not unreasonable and I do exercise my discretion in favour of the plaintiff and will allow Counsels’ fees.
44. I will hear the parties on the orders sought.

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^[1] Born 23 January 1985
^[2] Transcript (‘T’) 2, Line (‘L’) 30
^[3] Plaintiff Court Book (‘PCB’) 6
^[4] Unreported, County Court of Victoria 26 May 2017, T7-8
^[5] [2018] VCC 2314

^[6] [2020] VCC 380 at Para 6
^[7] [2021] VCC 1161, at paragraph [32]

^[8] Gellard v Victorian WorkCover Authority [2017] VCC 1919; Dowling v Myers Street Family Medical Practice Pty Ltd (Ruling as to Costs) [2018] VCC 2314; Traumanis v State of Victoria (Ruling) (unreported, VCC); Grech v Victorian WorkCover Authority (Ruling as to Costs) [2020] VCC 968; Conway v Victorian WorkCover Authority (Ruling as to Costs) [2021] VCC 1197;
^[9] [2021] VCC 1161, at paragraph 38
^[10] PCB 100-101
^[11] PCB 144
^[12] PCB 148
^[13] PCB 155
^[14] PCB 127
^[15] T13, L6-7
^[16] Defendant Court Book (‘DCB’) 88-89, T15, L7-12

^[17] [2021] VCC 183

^[18] (op cit) at paragraph [16]
^[19] DCB 90