Decision confirms counsel's fees are not recoverable in workers' compensation common law claim

In brief - The recent decision of Anderson v Pickles Auctions Pty Ltd [2022] QSC 265 confirms that counsel's fees are not an outlay recoverable under regulation 137 of the Workers' Compensation and Rehabilitation Regulation 2014

Background

Mark De Leige Anderson (Plaintiff) claimed damages for personal injuries arising from a work-related incident against Pickles Auctions Pty Ltd (Defendant). The proceeding settled before a trial and a "release and discharge" (Release) was executed by the Plaintiff and Defendant, along with the Defendant's insurer, WorkCover Queensland (WorkCover).

A term of the Release stated that WorkCover would pay the Plaintiff's costs of, and incidental to the claim and proceeding calculated in accordance with Part 8, Division 2 of the Workers' Compensation and Rehabilitation Regulation 2014 (Qld) (Regulation), as agreed or as assessed. The Regulation is provided for under the Workers' Compensation and Rehabilitation Act 2003 (Act).

The parties were unable to agree to the calculation of the Plaintiff's costs. An application was heard before the Court whereby Ms Anne Campbell (Assessor) was appointed to assess the costs payable to the Plaintiff pursuant to Rule 686(c) of the Uniform Civil Procedure Rules 1999 (Qld) (UCPR) and the Release.

Issues in dispute

The Assessor issued her certificate on 30 August 2022, which concluded that counsel's fees are not an allowable outlay under Part 8, Division 2 of the Regulation. The Assessor also considered that the costs of two counsel should not be allowed, which was subject to an objection made by the Defendant.

In making her decision, the Assessor considered that the Regulation overrode the UCPR under the principle of "generalia specialibus non derogant" (meaning the general does not detract from the specific) as the Regulation is more recent and specifically related to the type of action. 

In this Application, His Honour Cooper J was required to determine: 

1. whether the Assessor was incorrect in concluding that counsel's fees were not an allowable outlay under the Regulation. If so, whether the Assessor was further incorrect in concluding that the costs of two counsel should not be allowed; 
2. whether the Court should make an exercise of discretion in accordance with Rule 742 of the UCPR. 

Legal costs for workers' compensation claims

The workers' compensation scheme is generally a "no costs" jurisdiction if a claim is settled prior to judgment. However, Part 8, Division 2 of the Regulation provides provisions to enable specific criteria of claimants to recover costs. The provisions only apply to a claimant who:

1. is assessed with a degree of permanent impairment (DPI) of 20% or more; or
2. has a terminal condition; or 
3. is a dependant.

Regulation 137 of the Regulation states that in addition to legal costs, a claimant is entitled to recover expenses incurred for outlays that relate to hospital or medical reports, taxation reports, fees charged by previous employers relating to the provision of documents, mediator fees, filing fees and other reasonable sundry expenses. There is no provision for counsel fees. 

Can a claimant recover counsel's fees?

The Plaintiff submitted that the text of r 137 suggests it is intended to allow recovery of certain identified costs rather than to prohibit items not mentioned in r 137. 

His Honour considered that the only indication of an entitlement to recover counsel's fees that might be found in the text of r 137 is the phrase "in addition to legal costs". His Honour then considered what was intended by the term "legal costs" and noted: 

1. although the term “legal costs” is not defined for the purposes of r 137, a plain reading of the opening words of r 137(1) in the context of the other provisions of Part 8, Division 2 of the Regulation suggests that the term has been used to refer to the legal professional costs recoverable under rr 135 and 136;
2. counsel’s fees are usually described as an “outlay” on an assessment of costs. On this point, the Plaintiff argued that the term "legal costs" had not been used in a consistent manner in the Act or the Regulation. In particular, in section 290A of the Act, a financial statement must include details of "legal costs" and "likely legal costs" which is understood to include counsel's fees.

However, despite the different interpretation, His Honour considered the various references did not displace the plain reading of "legal costs", nor does it establish a basis to recover counsel's fees. 

In determining the intention of the legislation, His Honour considered the cost consequences for a claimant who did not fit into the criteria specified by Part 8, Division 2, as per ss 310 to 314 of the Act, being:

1. if the court awards an amount of damages to a claimant that is equal to or more than the claimant’s final written offer then the court must order that the insurer pay the claimant’s costs on the standard basis from the day of the final written offer; but 

2. if the court awards an amount of damages that is less than a claimant’s final written offer, but more than the insurer’s final written offer, then each party must bear its own costs. 

The Plaintiff argued that if a claimant who pursues a claim for damages could never recover counsel's fees, even after total success at trial, the result would be "plainly absurd and manifestly unfair". However, His Honour considered that the operation of ss 310 to 314 of the Act avoided that unfairness as the claimant could be entitled to indemnity costs under s 312 if successful, which included counsel's fees.

Noting the serious costs consequences to a claimant who fails at trial, His Honour noted that the legislation sought to promote the settlement of claims without proceedings having to be filed in court, and a construction of Part 8, Division 2 of the Regulation, which does not allow a claimant to recover counsel’s fees, would be consistent with that legislative objective. 

His Honour concluded that, on the proper construction of the provisions of Part 8, Division 2 of the Regulation, a claimant is not entitled to recover counsel’s fees as part of his or her costs calculated in accordance with those provisions.

It is noted that His Honour did not agree with the Assessor's reasons in respect of the Regulation "overriding" the provisions of the UPCR. However, His Honour accepted that on the proper construction that error did not affect the outcome of the assessment.

Given His Honour had concluded that counsel's fees were not able to be recovered, the costs of two counsel were not recoverable. However, for completeness, His Honour considered the objection (independent of the interpretation of r 137) and found that the Assessor exercised discretion under r 742 of the UCPR. His Honour considered that the engagement of two counsel was not necessary or proper for the attainment of justice or for enforcing the rights of the claimant. 

The Application was dismissed. 

Implications 

This decision confirms that, where costs are allowable under the Regulation, a claimant is unable to recover counsel's fees as they are considered an outlay that are not specifically listed in r 137 of the Regulation.

In His Honour's interpretation of the intention of the Act and Regulation, it is evident that the legislative provisions seek to assist the parties in reaching a resolution without incurring unnecessary legal costs and outlays.